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3 Standard Deviation Setup on Micro 10-Year Yield FuturesIntroduction The Micro 10-Year Yield Futures contract has caught the attention of many traders recently, as its price action reached the upper 3 standard deviation of the Bollinger Band® in the daily time frame. This rare occurrence presents a potential mean reversion setup, where the price could revert back toward its historical average. This article explores what mean reversion is, why it matters in trading, and how the 3 standard deviation Bollinger Bands® setup may indicate an opportunity to short this market. We’ll also discuss key price levels, contract specifications, and a potential trade setup for shorting Micro 10-Year Yield Futures. What is Mean Reversion in Trading? Mean reversion is a trading concept based on the idea that asset prices fluctuate around a central value or mean over time. When prices move too far away from this mean, they often correct or revert back toward that average. This is particularly useful in markets that experience high volatility or extreme price movements, as those extremes tend to reverse at some point. In simple terms, mean reversion strategies involve selling (or shorting) assets when they are significantly above their historical average, with the expectation that prices will return to normal levels. Conversely, buying when prices are significantly below the mean can also be a valid strategy. The 3 Standard Deviation Bollinger Band® Setup Bollinger Bands® are a popular technical indicator used to measure volatility and price extremes. The bands are plotted a certain number of standard deviations away from a moving average. The further away prices move from the average, the more extreme the movement. Reaching the upper 3 standard deviation Bollinger Band® is a rare occurrence that suggests extreme overbought conditions. Historically, when an asset reaches this level, the likelihood of a price pullback increases, as market participants may see it as an unsustainable level. In the case of Micro 10-Year Yield Futures, the recent rally has pushed prices to this rare zone, setting the scene for a potential mean reversion. Key Price Levels and Resistance Zones As the Micro 10-Year Yield Futures price approaches extreme levels, there are two key resistance zones which traders should be aware of: 4.174-4.021. These levels represent areas where selling pressure might intensify, pushing prices down and aiding in the mean reversion process. Traders looking to capitalize on this potential mean reversion setup can consider initiating short positions within this resistance range. These resistance zones act as psychological and technical barriers, providing an opportunity for traders to place their entries. Additionally, these levels help to manage risk, as they define a clear area to set stop-loss orders just above the upper resistance. Contract Specifications and Margin Requirements Understanding the specifications of the Micro 10-Year Yield Futures contract is crucial for traders looking to execute any trade. Here are some of the key details: Tick Size: The minimum price fluctuation is 0.001, which equates to $1 per tick. Margin Requirements: Margin requirements vary. Currently, the initial margin for Micro Yield Futures is around $320 per contract, making it accessible to a wide range of traders. Check with your broker for specific margin amounts. This knowledge is essential in calculating potential profit and loss in dollar terms, as well as determining the appropriate position size based on your available margin. Trade Setup Example Let’s now move on to a practical trade setup based on the discussed conditions. Entry Point: Shorting Micro 10-Year Yield Futures within the resistance range between 4.174 and 4.021. Stop Loss: A stop should be placed just above the upper resistance, say around 4.175, to protect against further price appreciation. Target: The target for this mean reversion trade would be around the mean of 3.750, where prices are expected to revert based on historical behavior. Reward-to-Risk Calculation: If a short entry is made at 4.021, with a stop at 4.175 (154 basis points risk) and a target at 3.750 (271 ticks potential gain), the reward-to-risk ratio would be approximately 1.76:1. A higher entry point closer to the upper resistance at 4.174 would significantly improve the reward-to-risk ratio, but it also increases the likelihood of missing the entry if the market reverses before reaching that level. In dollar terms, each tick (0.001) is worth $1, so the 154-tick stop loss represents a risk of $154 loss per contract, while the potential reward of 271 ticks equates to $271 worth of gains per contract. Risk Management Considerations Risk management is a critical aspect of any trading strategy, especially in futures trading. While the 3 standard deviation Bollinger Band® setup provides a compelling case for mean reversion, it's essential to manage risk carefully to avoid significant losses. Stop-Loss Orders: A well-placed stop-loss is crucial to protect against unexpected market moves. In this case, placing the stop above the resistance zone (around 4.175) ensures that risk is controlled if the market continues to rally instead of reversing. Position Sizing: Given the volatility of futures contracts, it is important to adjust position sizes according to the trader’s risk tolerance and available margin. Overleveraging can lead to large losses if the market moves against the trade. Moving Averages Can Shift: It’s important to remember that the moving average (the mean) can change as new data comes in. While the target is currently around 3.744, this level may adjust over time, so traders need to monitor the mean as the trade progresses (which is why we have set the target to initially be slightly higher at 3.750). Resistances as Reinforcements: The resistance zone between 4.174 and 4.021 can act as reinforcements to the mean reversion. Traders should observe price behavior at these levels to confirm rejection signals before entering the trade. Conclusion In conclusion, the Micro 10-Year Yield Futures contract presents a unique trading opportunity as it has reached the rare 3 standard deviation Bollinger Band® on the daily time frame. This extreme price level indicates potential overbought conditions, making it a candidate for mean reversion back to the mean at approximately 3.750. The trade setup involves shorting within the resistance range, with a well-defined stop and target, and offers a favorable reward-to-risk ratio. However, as always, caution is advised, and traders should manage risk effectively using stop-loss orders and appropriate position sizing. When charting futures, the data provided could be delayed. Traders working with the ticker symbols discussed in this idea may prefer to use CME Group real-time data plan on TradingView: www.tradingview.com - This consideration is particularly important for shorter-term traders, whereas it may be less critical for those focused on longer-term trading strategies. General Disclaimer: The trade ideas presented herein are solely for illustrative purposes forming a part of a case study intended to demonstrate key principles in risk management within the context of the specific market scenarios discussed. These ideas are not to be interpreted as investment recommendations or financial advice. They do not endorse or promote any specific trading strategies, financial products, or services. The information provided is based on data believed to be reliable; however, its accuracy or completeness cannot be guaranteed. Trading in financial markets involves risks, including the potential loss of principal. Each individual should conduct their own research and consult with professional financial advisors before making any investment decisions. The author or publisher of this content bears no responsibility for any actions taken based on the information provided or for any resultant financial or other losses.
CBOT_MINI:10Y1!Education
by traddictiv
BTC - Good Signs for 2024 already 🏆Hello TradingView Family / Fellow Traders, 🏹 Based on my earlier BTC analysis (as shown in the attached chart), we have been anticipating a breakout from the triangle pattern, which is crucial in determining the market sentiment for the rest of the year. Last week, BTC successfully breached the triangle pattern to the upside, signaling a shift in momentum as the bulls gained control and pushed the price beyond 40,000. 📈 Currently, the next significant resistance level is expected around 43,350. If this level is surpassed to the upside, we can anticipate further bullish movement with a potential target near the 48,000 mark. The bullish trend will likely persist as long as the last H4 low remains unbroken to the downside. 📚 Always follow your trading plan regarding entry, risk management, and trade management. Good luck! All Strategies Are Good; If Managed Properly! ~Richard Nasr
by TheSignalyst
2
[2023] An unfortunate tale of up-and-coming mishaps.Dear readers, Unfortunately, we have failed to create our good fortune in 2022. The main reason most influencers, traders and market followers; kept the "Buy the Dip" ante; is due to most of us believing in crypto; but also the idea that if we didnt make it in 2022, the bearishness due in 2023 could become damaging to the long-haul. 2023 is the year the U.S infrastructure bill is set to kick in. This bill conveyed a number of new burdens to be carried by node operators, miners and services. The biggest one of them being the tax reporting requirements which are currently unfeasible. If it weren't sufficiently bad; we also have to remain aware of the tactics, government roll out of CBDC's, could translate into. From a support for crypto-currencies in order to drive CBDC adoption, to, a possible view of crypto-currencies cannibalizing into the market for CBDC's. We are now starting the year with bearish macro indicators. A FED that is still unwilling to stop tightening and an overall market sentiment of disappointed at no pause/break in Q4 2022. This sentiment finds further justification in the steep decline in $APPL stock. A stock that for long was seen as a barometer for tech and the one tech blue-chip the majority of funds from low-risk pension funds to high risk hedge-funds, saw as a must within any portfolio. With all this in mind, 2023 looks set to be the most bearish year to date. We are slowly entering a period in history, where people simple do not enjoy sufficient disposable income to pay for Netflix and Spotify.(Sharp users decline. Sufficient for Netflix to review its subscription model and possibly roll out an ads based subscription.) A period where credit card debt is ballooning, not due to spending propensity, but due to people relying on credit to pay monthly utility bills, mortgages and other credits due. All in all we must remain warry. Many things are set to break in 2023. Utilities are set to remain climbing. Central-banks remain unwilling to change stance. It is now not the moment to attempt buying crypto or risk-on assets. Trade safe, and if you only know how to trade crypto, consider taking the time to learn about energy markets, defense and agriculture. The sun will set on crypto once more, but in these dark times, we must rush to safety. Happy new year and lets get to it legends :) Rob
Short
by TheBitcoinGeneration
2
Forecast US10YGood day everyone! Don't forget to put your thumbs up and write your comment if you like the idea The bar for 10-year Treasuries has been broken. The 10-year Treasury yield has broken the trend at 3.8%. In fact, this opens the way for growth to indicators in the range of 4.5-4.6%. There are elections in November, and we need to show at least some effect from measures to combat inflation. This is the main task. Well, what's next? Let's assume that we managed to somehow stabilize the situation with inflation (actually or by manipulating statistics is another question) by achieving a target rate of around 4.5%. Let the economy go into recession. And, after some time, start the cycle of lowering the rate again and pulling the economy out of recession? The current rates were in 2008, and the values ​​were 4.5% in 2007. And the Fed had enough of this "reserve" in reducing the rate for almost 14 years. DISCLAIMER: The opinion of the author may not coincide with yours! Keep this in mind and consider in your trading transactions before making a trading decision.
TVC:US10Y
by airstels
1
1 Year Of BTC El Salvador CelebratesEl Salvador has used Bitcoin for a year. El Salvador started using Bitcoin as a legal tender a year ago after President Nayib Bukele made a contentious choice. The public welcomed the new chance with enthusiasm, but since then, Bitcoin's value has fallen, and some experts believe the initiative was a disaster. Bitcoin is up 2.72% today, Ethereum is up 8%, and Solana is up nearly 5% as the cryptocurrency markets rebound. This Thursday morning, cryptocurrency markets are up. Pololu, Polygon, and Ethereum have made gains. Shiba Inu and Dogecoin, two meme coins, have also increased in value over the past 24 hours. Volatility has been seen in stablecoins. "More CBDC news," the Ripple advisor teases. According to Ripple, it may soon reveal additional information regarding its central bank digital currency projects. Advisor to the CBDC Antony Welfare The last session saw a 3.1% increase in BTC/USD. The latest session saw a massive 3.1% increase in the Bitcoin-Dollar pair. The MACD is sending a negative signal. Resistance is at 20712.8113, while support is at 17730.3773.
SAXO:BTCUSDLong
by IPatrice
Eth cost pattern shows with a $6.25 Trillion ETHEthereum cost graph gives negative indications to experts after slashing around for a year. A sum of 2.1 billion ETH tokens has been singed in total, representing $6.25 trillion. Regardless of the huge decrease in circling supply, examiners don't expect enormous moves in Ethereum cost. Ethereum cost could plunge as experts distinguish indications of negative fatigue in the altcoin's cost c. This comes despite a drop in Ethereum's circling supply as the amount of ETH consumed hits a record 2.1 billion. Ethereum cost could proceed with its descending pattern The all-out number of Ethereum tokens consumed hit another achievement, crossing 2.1 billion today. In light of information from the Ethereum consume tracker, $6.25 trillion in ETH has been scorched up to this point, being pulled unavailable for general use forever.
FTX:ETHUSDLong
by IPatrice
BTC Remains Hoarded As Price DropsAccording to on-chain data, a majority of Bitcoins BTC have not been moved in at least a year. Crypto investors are holding on to their BTC despite Bitcoin’s performance. Long-term investors are adding to their positions or staying put on their BTC exposure. At the time of reporting, over 60% of all Bitcoins have not moved in the last year. According to Glassnode's HODL Waves indicator, as of Feb. 18, 60.61% of the BTC supply has not been transacted for a year or more.
Long
by Tanya44741
NIO vs APPLEthose 2 chart seems pretty similar. fact is: it's not only NIO. TSLA too is similar, EV stocks are similar, SOLAR stocks are similar, trendies are similar.. and you know what? APPLE price dropped 80% after that... check this and what else do we see? before that, volume was lowering, but the crash omg, there was so much volume... and what else? well, do you see the NATR indicator? there was a BIG spike... signing the bottom basically... apple was 1 USD before the crash, 25 cents after, and 150 USD now, after almost 20 years. who else thinks that EV and GREEN ENERGY is the future? well, a lot, especially the younger generation (I'm one of those btw), and guess what? those people are the ones who will be running the world in 20 years from now (I'm 20 right now, in 20 years I'll have a job, and ill be doing my part in the economy, and with my own thought, ALSO about energy usage..). so, people idea influence the market, and that is why today the green energy market is just at its start, as technology was 20 years ago, when a bunch of young people created Apple, Microsoft, Amazon, Facebook, etc.. and following their belief, the market has grown in that direction. so, let time do its job, and always use STOP LOSS. ofc, you could try to short those stocks, but idk, it's not my thing doing so. thank you for reading till now, and always enjoy your youth.
NYSE:NIO
by camelot0707
1