The 10-Year Treasury Note: Be Ready For A Breakout

The 10-Year Treasury Notes Price has been in a pullback retracement since 2009 began, but a clear triangle pattern has now formed and price is reaching the apex.  Let’s look.

Price made a new high over $130 in late December, though we’ve seen a distinct retracement off this level ever since.  Although I haven’t shown a Fibonacci grid, we’ve retraced back to the 50% retracement (from the lows to the highs) which stands at $121.05, an area where price is finding solid support (with the exception of one blip beneath).

Price broke a descending trendline in early February which led to the current consolidation - or triangle - pattern we’re seeing now.

A positive momentum divergence has been forming under price since we had our first swing low of the year in 2009, which could hint that the likely breakout will be to the upside… though it’s probably best to wait for an actual break to materialize before trying to guess in which direction price will break.

So we see support at $122 and resistance at $124 and a tightly coiled market between those levels.  The moving averages are doing us no good (just like we throw out oscillators in a strong trend, we throw out moving averages in rangebound conditions).

Keep watching this closely.  An upside break could mean we would get a downswing in US Equities (Stocks) which would complete the Elliott Wave (5) Theory.  However, a break-down from this level could be construed as bullish for stocks.  There’s other cross-currents (the Treasury issuing Bonds, which increases supply and pushes prices down) so classic analysis might not be so easy in this environment.

It’s a tightly coiled market - watch closely for the spring thrust out of this area.

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