Interesting Price Patterns In The 10-Year Treasury Yield

I found an interesting series of patterns in the 10-Year (TNX) Treasury Yields that I thought I would share with you.  Let’s look at the Monthly chart and see these equal moves and then see the confluence Fibonacci that’s setting up right now.

(click for full image at Chart.ly)

What should jump off the chart at you is the three symmetrical or equal moves that have filled out since 1994.

The three blue vertical lines represent the distance from one low to the next low and the red horizontal line represents the horizontal distance from low to low.

What’s strange is that we see three equal moves over the last 15 year period, each lasting about 5 years (though the most recent cycle has been slightly extended).

I’m sure this has to do with some sort of larger cycle price action, but it’s eerie in the symmetry.  Take a closer look.

Now to the present….

Yields made a fresh low for 2009 at about 2.0% but have suddenly risen to the 4.0% yield level (as bond prices have fallen during the stock market recovery).

Currently, yields nipped up against the 4.0% level which reflects the 50 month EMA and the 61.8% Fibonacci retracement of the recent downswing from 2007.

I call this a ‘convergence’ or ‘confluence’ zone which is could be expected to hold as significant resistance.

Keep in mind that - despite the chatter we are hearing - yields are in a long-term downtrend and are in a more recent confirmed downtrend since peaking ahead of the stock market in 2007 (note the lower lows and lower highs - we’d need to crack above 4.0% to make a higher high).

Until we break above 4.0% (which the Treasury I’m sure does not want to happen), the larger trend structure holds sway and this is the current structure in which yields are fluctuating.

Subscribe by RSS Subscribe by Email