This past April 15, 2014, I offered a relatively imminent value where the benchmark 10-Year treasuries would possibly reverse and start a new upward trajectory.
In this new chart, I would like to offer mitigating views from Fibonacci values, counts, and an predictive analysis, each standing in contrast to one another, and offering lower values than the one imminent support defined this past April 15th, here: "$TNX: Early Reversal Signal ... Confirmation pending" -
I decided to do this to offer the different types of traders (pattern, , Fibonacci and occult geometrist) an array of technical angles, all calling for a relatively narrow support and potential reversal.
Please, refer to the chart for the overall technical commentary, under "Tech-Note". Also, in the link beneath the chart, feel free to review recent analysis for Gold , Silver , DOW Composite .
Thank you for your supportive readership and friendly referrals.
Predictive Analysis & Forecasting
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18 days ago, I overlaid the chart with a very shy attempt at an impulsive EW Wave (1), to highlight a probable corrective a-b-c wave. This was done in the context of patterns, one a AB=CD symmetrical pattern, which the EW's a-b-c represents in its expected geometry, but also to highlight the convergent price action towards the structure defined by the 2.35/2.39 range, all of which are lining up with the predictive model.
In addition, a forecast target remains of moderate probability, sitting below this solid 2.35/2.39 support, at 2.12.
A separate chart offers a different perspective on this benchmark treasuries (see it here: https://www.tradingview.com/v/pIWttDXk/), where recent price action has defined a solid support along the 1-3-5 support line.
Overall, I remains bearish in the most immediate future, expecting a moderate-probability, model-based validation of the 2.35/2.39 range. However, in the longer term, I expect a rally above current technical levels (i.e.: above 3.03).
Predictive Analysis & Forecasting
PS: Feel free to replay this price action, using TradingView.com's replay feature:
From my Twitter feed, alias: @4xForecaster:
"$TNX vs $TYX - Price moves as forecast. Expect more relative weakness in the 10-Yr TSY next week - via @tradingview"
Relative strength chart between 10-Yr and 30-Yr TSY:
Price continued to move in the forecast direction, and is likely to reach down to its 1-4 Line, as per Wolve Waves pattern definition.
PS: See alternate chart ehre:
"$TNX vs $TYX: Price continues to fall towards Wolfe's 1-4' Line per forecast carving new lows - via @tradingview"
$TNX continues to move towards the 2.12 level as forecast. If and once this level is reached, I would keep an eye out on Forex side of things, particularly USD crosses:
Looking at the relative strength chart itself, it is likely that price will continue to move towards the forecast 1-4' level. In fact, the 1-4 line stands as a probable deeper target as well.
In terms of relative strength, a continued decline in price suggests that the rate of decline in TNX increases towards an ever decreasing yield, perhaps indicating a growing risk-tolerance in the most immediate timeframe (i.e.: ten-year horizon) relative to its more junior 30-year treasuries.
Considering the ever-falling VIX values (approaching its Dec. 01st, 2006 historical low value of 8.60), this "risk-tolerance" reflection may not last too much longer (that low value of 2006 was quickly turning into a crackling candle firework that culminated to a 96.40 high in OCT 2008).
The market has to feel like that moment in the party were the soporific alcohol vapors are starting to dissipate and it feels like the end might come nearer than expected.
Despite a recent rallying in the relative strength chart that pits the 10-year benchmark $TNX against its senior 30-year $TYX US treasuries, I continue to expect further down move based on technicals.
The underlying pattern, be it a wedge, a Wolfe or a EW's diagonal triangle, had peaked at Point-5 with a signature overshot ("over-throw") typical of the diagonal triangle, but not uncommon in the other geometries. What ensued, as depicted in charts posted over the past weeks, is a sustained downward drill up to a recent shallow relief rally.
Whether this relief rally signifies the beginning of a relative strengthening in the $TNX is unsure, but the pattern does call for a price action seeking to validate the 1-4 Line ("Take Profit Line of the Wolfe pattern) - Not that the pattern produced an unusual bifid 1-4 and 1-4' Line, based on a sustained validation of the 2-4 Line, as well as a concept I have named "tunneling", where price action in candles seemingly "split" to allow the 1-4 or the 1-4' line to shoot through, as if a tunnel was fashioned for this purpose - If you see this, great. If not, no worries, as this is not a condition to validate the Wolfe Pattern, but one that I use to refine my 1-4 Line and TP aim.
At this point, I would simply wait for the market to price in the overall risk, assuming that the $TNX acts as a proxy for sentimental biases, and therefore as a directional bias for the USD.
If you used the overlaying feature available in the TradingView charting tools, you will see for instance that the $USDJPY maintains an interesting correlation with this $TNX/$TYX chart:
While we wait for the market to absorb the recent ECB rate decision, I expect the USD to continue a downward march against a probable limited rallying in the $EURUSD - In fact, today, I charted this chart looking at probable overhead obstacles, one particularly defined at 1.37705, but also a recent high at 1.3993 - See the recent analysis here:
"$TNX reached forecast support last month; now threatens loftier rally - Watch $USDJPY - via http://www.tradingview.com"
The risk-correlated benchmark in the 10-Yr US Government bond reached the forecast support last month. However, the target set at 2.12 on May 2014 remains unvalidated, especially as price has rebounded towards the most recent highs @ 2.65.
While the target remains intact and in force, recent market concerns has emerged around housing recoveries, as HELOC loans are coming due. In an environment of lower employment, higher debt load and weaker international growth prospects relative to where we were 10 years ago as a net growing domestic market, one has to be concerned about the ability for the current unemployed, poorer and illiquid consumers to be able to reimburse these sup'ed up loans ... And that is what may be behind the recent jump in the $TNX among other things.
A tightly correlation here is the $USDJPY pair, which has moved along with this benchmark chart in terms of risk assessment and overall investors sentimental assessment. Looking at this pair, once might wonder whether a bullish tide is coming to wash over any residual bearish sentiment floating out there, especially as we assess the recent advance relative to its overhead trendline in the following chart:
OVERALL, the 10Yr benchmark has recovered some ground and may challenge the recent 2.65 highs. However, I would wait for a break over the Point-b of the internal a-b-c waves that completed recently before being concerned for bears.
"$TNX/TYX remains on tract to decline further: via http://www.tradingview.com | $TNX $TYX $Gold #forex $EUR $USD"
Looking at the total pattern, an expected a-b-c wave did complete - albeit at higher levels than expected, as it reversed at the 1-3-5 Line. At this point, a continued decline is expected if this (Wolfe) pattern remains true.
$TNX hit all bearish targets; Now expecting recovery to loftier levels:
@tradingview #TNX $XAU $XAG $COMP #Forex