Yield Rally on Verge of Breakdown

| April 8, 2017

In March, our computer models predicted the formation of an intermediate-term high in the 10-year Treasury Note yield. Since then, the 10-year yield has moved lower and this week the decline began a test of the last intermediate-term cycle low (ITCL) in February at 2.31%. The strong rally from 2016 has now formed two intermediate-term highs at the same level without moving up to meaningful new highs, suggesting that a reversal may be in progress.

On the daily chart, the uptrend is currently testing congestion support in the 2.30% area for the fourth time during the past four months.

A daily close well below the 2.30% level would be a meaningful breakdown that would signal the likely start of a new downtrend and forecast substantial losses during the next 4 to 8 weeks.

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Category: Commentary, Market Update


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