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Major Market Correlations Between Yields, Stocks And USDollarIn 2022, the stock market took a hit and the US Dollar gained strength due to higher yields in the US. Toward the end of that year, as yields eased off, the US Dollar lost some of its power, and this coincided with a rebound in stock market performance. Now, as yields are climbing once again, the US Dollar is regaining strength, but it seems like stocks are beginning to lose their previous momentum. However, the situation might shift if these rising yields are in the process of completing their fifth wave and are on the verge of slowing down. In that case, the US Dollar could actually become weaker again, and the stock market might continue its upward trend. Of course a lot will depend on the FED policy decisions, where dollar can turn down if FED will stop the hiking cycle. Well, a lot will depend on the US data, so market participants will surely watch the NFP very closely tomorrow.
TVC:US10Y
by ew-forecast
1
JUST A REMINDER CHART FOR BEGINNERS Here are some Educational Chart Patterns JUST A REMINDER CHART FOR BEGINNERS I hope you will find this information educational & informative. >Head and Shoulders Pattern A head and shoulders pattern is a chart formation that appears as a baseline with three peaks, the outside two are close in height and the middle is the highest. In technical analysis, a head and shoulders pattern describes a specific chart formation that predicts a bullish-to-bearish trend reversal. >Inverse Head and Shoulders Pattern An inverse head and shoulders are similar to the standard head and shoulders pattern, but inverted: with the head and shoulders top used to predict reversals in downtrends An inverse head and shoulders pattern, upon completion, signals a bull market Investors typically enter into a long position when the price rises above the resistance of the neckline. >Double Top (M) Pattern A double top is an extremely bearish technical reversal pattern that forms after an asset reaches a high price two consecutive times with a moderate decline between the two highs. It is confirmed once the asset's price falls below a support level equal to the low between the two prior highs. >Double Bottom (W) Pattern The double bottom looks like the letter "W". The twice-touched low is considered a support level. The advance of the first bottom should be a drop of 10% to 20%, then the second bottom should form within 3% to 4% of the previous low, and volume on the ensuing advance should increase. The double bottom pattern always follows a major or minor downtrend in particular security and signals the reversal and the beginning of a potential uptrend. >Tripple Top Pattern A triple top is formed by three peaks moving into the same area, with pullbacks in between. A triple top is considered complete, indicating a further price slide, once the price moves below pattern support. A trader exits longs or enters shorts when the triple top completes. If trading the pattern, a stop loss can be placed above the resistance (peaks). The estimated downside target for the pattern is the height of the pattern subtracted from the breakout point. >Triple Bottom Pattern A triple bottom is a visual pattern that shows the buyers (bulls) taking control of the price action from the sellers (bears). A triple bottom is generally seen as three roughly equal lows bouncing off support followed by the price action breaching resistance. The formation of the triple bottom is seen as an opportunity to enter a bullish position. >Falling Wedge Pattern When a security's price has been falling over time, a wedge pattern can occur just as the trend makes its final downward move. The trend lines drawn above the highs and below the lows on the price chart pattern can converge as the price slide loses momentum and buyers step in to slow the rate of decline. Before the lines converge, the price may breakout above the upper trend line. When the price breaks the upper trend line the security is expected to reverse and trend higher. Traders identifying bullish reversal signals would want to look for trades that benefit from the security’s rise in price. >Rising Wedge Pattern This usually occurs when a security’s price has been rising over time, but it can also occur in the midst of a downward trend as well. The trend lines drawn above and below the price chart pattern can converge to help a trader or analyst anticipate a breakout reversal. While price can be out of either trend line, wedge patterns have a tendency to break in the opposite direction from the trend lines. Therefore, rising wedge patterns indicate the more likely potential of falling prices after a breakout of the lower trend line. Traders can make bearish trades after the breakout by selling the security short or using derivatives such as futures or options, depending on the security being charted. These trades would seek to profit from the potential that prices will fall. >Flag Pattern A flag pattern, in technical analysis, is a price chart characterized by a sharp countertrend (the flag) succeeding a short-lived trend (the flag pole). Flag patterns are accompanied by representative volume indicators as well as price action. Flag patterns signify trend reversals or breakouts after a period of consolidation. >Pennant Pattern Pennants are continuation patterns where a period of consolidation is followed by a breakout used in technical analysis. It's important to look at the volume in a pennant—the period of consolidation should have a lower volume and the breakouts should occur on a higher volume. Most traders use pennants in conjunction with other forms of technical analysis that act as confirmation. >Cup and Handle Pattern A cup and handle price pattern on a security's price chart is a technical indicator that resembles a cup with a handle, where the cup is in the shape of a "u" and the handle has a slight downward drift. The cup and handle are considered a bullish signal, with the right-hand side of the pattern typically experiencing lower trading volume. The pattern's formation may be as short as seven weeks or as long as 65 weeks. >What is a Bullish Flag Pattern When the prices are in an uptrend a bullish flag pattern shows a slow consolidation lower after an aggressive uptrend. This indicates that there is more buying pressure moving the prices up than down and indicates that the momentum will continue in an uptrend. Traders wait for the price to break above the resistance of the consolidation after this pattern is formed to enter the market. >What is the Bearish Flag Pattern When the prices are in the downtrend a bearish flag pattern shows a slow consolidation higher after an aggressive downtrend. This indicates that there is more selling pressure moving the prices down rather than up and indicates that the momentum will continue in a downtrend. Traders wait for the price to break below the support of the consolidation after this pattern is formed to enter in the short position. > Channel A channel chart pattern is characterized as the addition of two parallel lines which act as the zones of support and resistance. The upper trend line or the resistance connects a series of highs. The lower trend line or the support connects a series of lows. Below is the formation of the channel chart pattern: >Megaphone pattern The megaphone pattern is a chart pattern. It’s a rough illustration of a price pattern that occurs with regularity in the stock market. Like any chart pattern, there are certain market conditions that tend to follow the formation of the megaphone pattern. The megaphone pattern is characterized by a series of higher highs and lower lows, which is a marked expansion in volatility: >What is a ‘diamond’ pattern? A bearish diamond formation or diamond top is a technical analysis pattern that can be used to detect a reversal following an uptrend; the however bullish diamond pattern or diamond bottom is used to detect a reversal following a downtrend. This pattern occurs when a strong up-trending price shows a flattening sideways movement over a prolonged period of time that forms a diamond shape. Detecting reversals is one of the most profitable trading opportunities for technical traders. A successful trader combines these techniques with other technical indicators and other forms of technical analysis to maximize their odds of success. Technicians using charts search for archetypal price chart patterns, such as the well-known head and shoulders or double top /bottom reversal patterns, study technical indicators, and moving averages and look for forms such as lines of support, resistance, channels and more obscure formations such as flags, pennants, balance days and cup and handle patterns. Technical analysts also widely use market indicators of many sorts, some of which are mathematical transformations of price, often including up and down the volume, advance/decline data and other inputs. These indicators are used to help assess whether an asset is trending, and if it is, the probability of its direction and of continuation. Technicians also look for relationships between price/ volume indices and market indicators. Examples include the moving average, relative strength index and MACD. Other avenues of study include correlations between changes in Options (implied volatility ) and put/call ratios with a price. Also important are sentiment indicators such as Put/Call ratios, bull/bear ratios, short interest, Implied Volatility, etc. There are many techniques in technical analysis. Adherents of different techniques (for example Candlestick analysis, the oldest form of technical analysis developed by a Japanese grain trader; Harmonics; Dow theory; and Elliott wave theory) may ignore the other approaches, yet many traders combine elements from more than one technique. Some technical analysts use subjective judgment to decide which pattern(s) a particular instrument reflects at a given time and what the interpretation of that pattern should be. Others employ a strictly mechanical or systematic approach to pattern identification and interpretation. Contrasting with technical analysis is fundamental analysis, the study of economic factors that influence the way investors price financial markets. Technical analysis holds that prices already reflect all the underlying fundamental factors. Uncovering the trends is what technical indicators are designed to do, although neither technical nor fundamental indicators are perfect. Some traders use technical or fundamental analysis exclusively, while others use both types to make trading decisions. Trade with care. If you like our content, please feel free to support our page with a like, comment
Education
by CRYPTOMOJO_TA
31
US yields looking "toppy"; more weakness after rallyThe US CPI came down more than expected yesterday at 3.2% y/y, and as a result the USD fell sharply with US yeilds, while stocks and metals are on the rise. For now, this seems to be a very important data as it causes also a very important breakdown on USD index and US yeilds. Looking at the US yeilds, we have five waves down, so it means that top is in place, and suggests that speculators believe that FED is done with hiking. But road map to lower yields/higher bonds will be a bit "bumpy", so be aware of some rally, especially if we consider five waves down on 10 year US yields. So A-B-C rally can cause some pullbacks on XXX/Dollar pairs, which will eventually see more upside after pullbacks. Grega
TVC:US10Y
by ew-forecast
$TLT 20 Year Treasury Bond ETF The NASDAQ:TLT , or the 20 Year Treasury Bond ETF, appears to be undergoing a significant shift in its trend dynamics based on your description. Here's a breakdown of what you're observing: 1. **Bearish to Bullish Reversal**: This indicates that the ETF, which was previously in a downtrend (bearish phase), is showing signs of reversing to an uptrend (bullish phase). Such reversals are often identified through technical indicators like moving averages, momentum oscillators, or trendline breaks. 2. **Parallel Downtrend Break**: The breaking of a parallel downtrend suggests that the ETF has moved beyond a previously established downward channel. This is a technical pattern where the price moves within two parallel lines downwards. Breaking out of this channel can be a significant bullish signal, indicating that the selling pressure is easing and buyers are starting to take control. 3. **Bullish Consolidation**: After the initial reversal, it seems the ETF is now in a phase of bullish consolidation. This typically involves the price moving sideways or slightly pulling back, which allows the ETF to stabilize after the initial surge in buying activity. This phase often precedes further upward movement as it suggests that buyers are still interested at these higher price levels, and the selling pressure is not strong enough to push the price back down. For a more detailed analysis, it would be beneficial to look at specific technical indicators such as Relative Strength Index (RSI), Moving Average Convergence Divergence (MACD), volume data, as well as key support and resistance levels. Additionally, fundamental factors impacting Treasury bonds, like interest rate changes, inflation expectations, and overall economic outlook, should also be considered to complement the technical analysis. Remember, while technical analysis can provide valuable insights, it's always important to consider multiple factors and viewpoints when making investment decisions.
NASDAQ:TLTLong
by AlgoTradeAlert
TLT ~ Have US Yields finally topped? (Weekly / Nov 2023)NASDAQ:TLT chart mapping/analysis. Note: TradingView chart dividend adjusted. Price action bouncing off Golden Pocket (66% Fib) support Heavy trading volume = institutional activity (ie positioning?) Rejection wicks on previous weekly candles = selling pressure still present (correlation with long-end yields holding strength) Looking for re-test of lows + bounce to confirm double bottom support base established for bullish momentum. Inverse play = price action engulfs previous candle, completes gap partial-fill + taps overhead resistance aka descending trend-line (light blue dotted). Institutional short-squeezes could still be active - complimenting inverse play thesis. Failure to break above/below either trend-lines = price action continues to contract until eventually ripping in volatile fashion in either direction. Set alerts - monitor US yields - wait for trade to set up in your favour.
NASDAQ:TLT
by BlueHatInvestor
US10Y ~ Intraday Analysis (2H Chart)TVC:US10Y intraday mapping/analysis. US yields dip while bonds & stocks rip. US10Y in clear downtrend with potential bearish H&S pattern developing, TBC. H&S development would correlate with bonds/stocks pullback before further bullish momentum into EOY. Left shoulder, head & neckline outlined. Right shoulder parameters: Rally above ascending 1st trend-line (green dashed) Resistance at 200SMA, gap fill, 2nd ascending trend-line (green dashed) + upper range of descending parallel channel (white) Price action rolls over to re-test/break neckline & validate pattern Prelim target = lower range of ascending parallel channel (light blue) + 50% Fib confluence zone. Note: break of "neckline" before right should formation negates H&S = express trip to prelim target.
TVC:US10YShort
by BlueHatInvestor
US10Y Extremely overbought on Bearish Divergence. Sell longterm?The U.S. Government Bonds 10YR Yield (US10Y) is having the first red month (1M) after rising non-stop since May. It has been on extremely overbought levels for the last 12 months as the price established itself above the multi-decade Bearish Megaphone pattern, the same way it was oversold below it following the March 2020 COVID crash. As you know the price quickly corrected back inside the Bearish Megaphone in a pure technical harmonization process of the extreme levels. Technically it should follow a similar reversal now again, as the most important technical development of the year is October's Lower Highs formation on the 1M RSI. This is a huge Bearish Divergence as the price during the same period is trading on Higher Highs. The same kind of Bearish Divergence has only been spotted another two times in the last +40 years. On both occasions, an aggressive decline started. As a result it is only natural to expect a 1M MA50 (blue trend-line) test before 2024 is over, which right now is a huge early sell signal. ------------------------------------------------------------------------------- ** Please LIKE 👍, FOLLOW ✅, SHARE 🙌 and COMMENT ✍ if you enjoy this idea! Also share your ideas and charts in the comments section below! This is best way to keep it relevant, support us, keep the content here free and allow the idea to reach as many people as possible. ** ------------------------------------------------------------------------------- 💸💸💸💸💸💸 👇 👇 👇 👇 👇 👇
TVC:US10YShort
by TradingShot
3
Bonds are compelling as collateralEver since 2008, the world shifted more to the world of collateral and distrust, after the world of unsecured collapsed. Treasuries are dollars are in the future. As long as uncertainty remains high (or increases) there will be a place for government loans. Treasuries yielding near 5% on most maturities is "good enough" when compared to the historical 7% ish from equities. Technically speaking, treasuries may be forming a short term bottom. Tactically speaking, the gap between treasuries and stocks is very wide. Fundamentally speaking, there may not be enough reward to justify most large cap equities current yield when compared to the healthy yield in treasuries. Risk speaking, the biggest risk in holding treasuries is the loss in opportunity and the risk of more dollar devaluation/consumer inflation loss of purchasing power. In summary, Treasuries are worth a shot and they are likely de-risked at current levels. I will be considering bullish option spreads.
NASDAQ:TLTLong
by optionfarmers
2
The Bond Market is Pricing in a Collapse of The Yen Carry TradeThe spread between the US10Y and JP10Y has historically been a great leading indicator of contraction within the Yen Carry Trade and likely will be into the future. If we were to apply TA to it, we can see that the spread appears to be Double Topping and has formed a Bearish Shark at this top as the RSI breaks down and the MACD Diverges. If we are to take this as a warning, then we should expect this spread to go down significantly, and that would be accompanied by the contraction of the Carry Trade, leading to lower liquidity and signfiicantly tighter credit conditions and ultimately a depreciation in market pricing. I think we could see JPY and USD strength during this time but would avoid other currencies.
TVC:US10YShort
by RizeSenpai
2
High Yield Corporate Bonds as indicator for Risk AppetiteThis is not something I would use as a trading signal by itself, but it is a good indicator on the weekly chart of how bigger players are viewing risk appetite. High yield corporate bonds, as seen reflected in ETFs like AMEX:HYG and AMEX:JNK , are an interest data point. High yield implies that these are riskier bonds with a higher chance of default on the debts. Just like as individuals, we have credit scores and when we apply for loans, the interest rate can vary depending on how the bank rates us risk-wise on perceived ability to pay back the debt, those who have a lower score might get a higher interest loan because they are considered higher risk of default. Same basic principle applies to corporate debt. When liquidity is flowing and the economy overall looks good, large investors/investment banks will feel better about buying riskier high-yield bonds and other debts because we're in an economy paradigm where there's a better chance that not enough of those will default to cause significant harm to the debt holders. But, when the economy is getting pinched for whatever reason and liquidity starts to dry up, high risk, high yield debts are much less desired due to perceived increased risk of default. Sometimes the high yield debt moves pretty close in tandem with the market, see for example the dumping that happened during the 2020 COVID panic. Before and after that, you can often see a bearish divergence in AMEX:HYG and AMEX:JNK many weeks before the S&P finally tops out and begins its decline. The above chart, you can see the decline become more obvious as we wind down 2017 and head into 2018, then also see it again pretty obviously in the second half of 2021 before the sell off for most of 2022 started. Both AMEX:HYG and AMEX:JNK came online around 2007-8 timeframe, just before the GFC. You can see a pretty steady decline right from the beginning there, and a rapid rebound as things find bottom. What is interesting is how far both AMEX:HYG and AMEX:JNK came down throughout 2022, and while equities have since had a nice recovery bounce for most of 2023, the high yield bonds have not had such a recovery. It's actually instead slowly condensing price action with slightly higher lows, but also lower highs. We seem to be nearing the end of that wedge and hopefully soon we get an answer on what the risk appetite really is of risky debt, because it will be a solid signal of where equities may be headed next. Personally, I'm already seeing some indications that as we approach the end of the year, we may see a larger dip in equities. For how long and how large, that remains to be seen. For right now, we're having a recovery rally from selling off most of August and I'm not seeing any indication it's a good time to go against that trend, but that may change in the coming weeks.
AMEX:SPY
by dieseldub
A Traders’ Playbook – Defence remains the best form of attack Equity continues to trade heavily, and while we are getting to a point of extreme fear, the price action, and the bearish momentum in EU, AUS200 and US equity indices, suggest this is still a sellers’ market. While we have some big catalysts due this week, I still think we must navigate a passage of darkness before we see light in this tunnel. The geopolitical backdrop in the Middle East remains a dominant market consideration and the market still sees an increasing risk the conflict will not be contained with other players stepping into the conflict. A near 3% rally in Brent crude on Friday testament to those worries, with the move above $90 seeing traders bid up gold to $2006, with gold's role as the preeminent portfolio hedge once again confirmed. A move into the April/May supply area of $2050 seems perfectly feasible, and the bullish momentum in the price, and the ease by which we’ve seen gold push through well-watched resistance levels, suggests the path of least resistance remains higher and pullbacks should be well supported. The BoJ meeting could be a real curveball and while the odds are we see it proving to be a low-volatility event, if the BoJ does tweak the YCC cap to 1.5% it could trigger a wave of selling through global long-end bonds (yields higher). This would likely see sizeable gyrations play through all markets, with the JPY – which has stolen the crown from the CHF as the no.1 geopolitical FX hedge – likely to rally hard. Gov Ueda has aimed to be more predictable than former gov Kuroda, so with recent press suggesting a tweak to YCC could be on the cards, the prospect of change to policy is 50:50. We also get the US Treasury Quarterly Refunding activity throughout the week. To those who aren’t fixed-income traders, this can be an event that isn’t too well-known. As we saw in August, when the Treasury Department detailed increased auction size in its financing plans, it proved to be a key driver behind US Treasury yields rising sharply from 4%. Once again, this event does have the potential to create some big vol in bonds, which could spill over into FX and equity markets. This time around, could we see lower increases in supply, which in turn supports USTs? Staying in the US, while the FOMC meeting can never be ignored, traders get a thorough read on the US labour market and wages/earnings. On the docket, we get ADP payrolls, the Employment Cost Index, JOLTS job openings, Unit Labour Costs, jobless claims, and nonfarm payrolls. US swap pricing has a 25bp hike in December priced at a 20% chance, so big numbers in this report could see that probability rise, which would likely see the USD break out of the current sideways consolidation. Corporate earnings get another run past traders, with 24% of the S&P500 market cap reporting. Apple is the marquee name to report, with the options market pricing a move on the day at 3.7% - the market focused on iPhone demand and consumer trends in China. Rallies have been sold of late, with price now below the 200-day MA for the first time since 2 March 2022. It promises to be another lively week – good luck to all. The marquee event risks for the week ahead: Month-end flows – talk is pension funds and other asset managers rebalancing in favour of selling of USDs. China manufacturing and services PMI (31 Oct 12:30 AEDT) – the market sees the manufacturing index at 50.2 (unchanged) and services index at 51.8. EU CPI (31 Oct 21:00 AEDT) – while EU growth data seems the more important factor, we could see some volatility in the EUR on this data point. The market consensus is for headline CPI to come in at 3.1% and core CPI at 4.2%. EURCAD is trending higher, and I like it into 1.4750. BoJ meeting (31 Oct – no set time) – the BoJ should increase their inflation estimates, but the focus will fall on whether there is an adjustment or even full removal of Yield Curve Control (YCC). This is where the BoJ currently cap 10-yr JGB yields (Japan Govt bonds) at 1%. The consensus sees no change to YCC at this meeting, but there is a 50:50 chance we see the cap lifted to 1.5% - an action which could see JGBs sell off (higher yields) and see global bond yields higher in symphony. It could also see the JPY rally strongly. US consumer confidence (1 Nov 01:00 AEDT) – The market expects the index to pull back to 100.0 (from 103.0) – unlikely to cause to much of a reaction across markets unless it’s a big miss. US Treasury November Refunding (30 Nov at 06:00 & 1 Nov 12:30 AEDT) – the US Treasury Department (UST) will offer its gross financing estimates for Q42023 (currently $850b) and end-of-quarter targets for its cash balances. It is likely that the gross borrowing estimate will be lowered to $800b, perhaps even lower. The lower the outcome the more USTs should rally and vice versa. On 1 Nov we will see the UST announce the size of upcoming bond auctions across the 2-, 3-, 5-, 7-, 10- and 30-year bond maturities. The market expects auction sizes to increase across ‘the curve’ by around $1-2b for each maturity. As we saw in August, the higher we see these taken the greater the likely reaction in US Treasuries and subsequently the USD. FOMC meeting (2 Nov 05:00 AEDT) – The market ascribes no chance of a hike, so guidance from the statement and Powell’s press conference is key. One can never overlook a Fed meeting, but in theory, we shouldn’t learn too much new information and this should be a low-drama event. BoE meeting (2 Nov 23:00 AEDT) – UK swaps price a 4% chance of a 25bp hike at this meeting, and around a 1 in 3 chance of a 25bp hike by Feb 24. The split in the voting could also be important, with most economists leaning on a 6:3 split. The market feels like the BoE are done hiking, with cuts starting to be priced by June. US ISM manufacturing (2 Nov 01:00) – The consensus is for the index to come in at 49.0 (unchanged). Consider that the diffusion index has been below 50 since October 2022, so a reading above 50.0 could be modestly USD positive. US JOLTS job openings (2 Nov 01:00) – Last month we saw a big increase in job openings and further evidence the US labour market is tight. The consensus this time around is for 9.265m job openings (from 9.61m) – risky assets will want to see this turn lower again with reduced job openings. US nonfarm payrolls (3 Nov 23:30 AEDT) – With so many labour market and wage/earnings data point due out this week, the US NFP report is the highlight. After last month’s blowout 336k jobs print, the current consensus is for 190k jobs, the U/E rate at 3.8% and average hourly earnings at 4%. Brazil Central Bank meeting (2 Nov 08:30 AEDT) – The BCB should cut by 50bp. Earnings – This week we see earnings from UK, EU and US listed names coming in thick and fast - 24% of the S&P500 market cap report this week. Numbers from HSBC (Monday), Caterpillar (Tuesday) AMD (Tuesday), Qualcomm (Wednesday), Apple (Thursday) should get the attention.
Editors' picks
PEPPERSTONE:XAUUSD
by Pepperstone
22