US10Y About to drop strongly after the 0.75% hike?The US10Y recently broke below the August Higher Lows trendline and remains below the 4H MA50 since October 25. The bearish divergence that RSI's Lower Lows suggested is identical to the one in April, May. The price patterns are very similar and this was a sell signal that dropped to the 1D MA50 and the Support of the previous Higher Low.
We have drawn these levels on the current pattern and that Support is at 3.567 while the 1D MA50 at 3.667. With the 1D RSI still on Lower Highs and Lower Lows and the 1W STOCH RSI on a Sell Cross, we expect the US10Y to hit at least the 1D MA50.
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US10Y
XAUUSD : THE REAL DEALMy sell condition was confirmed as Gold closed below the 4H MA50 (1,647.59 on XAUUSD), so I continue selling with 1,620 as my TP.
Needless to say, the price action this week evolves around Wednesday's Fed Rate Decision, with the markets taking a 'sell first, ask questions later approach', since buyers were unable to break above the 4H MA200 (1,664.76) as we discussed last week.
1D is bearish RSI # 41.716
MACD # -9.980
ADX # 32.831
and since we also failed to break above the 1D MA50 and the overall long-term trend remains bearish (as discussed last week), we can even see a Lower Low within 1,605 - 1,600.
The US10Y posted a green candle on Friday and seems to be recovering, while the DXY broke again above its 1D MA50.
This shows that the markets don't seem to expect that the Fed will diverge from their plan just yet.
All prices mentioned on my analysis are on XAUUSD.
$tnx entering sideways consolidation US10Y, aka $tnx is likely entering a phase of sideways consolidation before another leg up
Last time it came out of a bear market bottom, it took $tnx 11 years to clear the 4-5% area for good and begin its long term uptrend phase...
11 years that $spx used to compound gains of 180%
(long pertains to $spx) for yields perhaps long 3% is a good idea! but imo the easy money on yields has been made by now.
Inverted yields and odd weeksThis chart shows the periods with inverted 10y2y yields. Usually inversion doesn't lead to recession, like 2008. However the similarities with 2000 are striking. 3 Years ago we had a brief yield inversion, like in 1998. Then a second inversion occurred, bringing prices down with it. The same happens now. Half of the bubble burst occurred with yields inverted. Therefore it isn't necessary for yields to normalize for us to drop. We are in a bubble and it probably has burst.
And a less interesting part of the idea follows:
Yesterday some uninteresting-number-of-weeks candles closed. It was fun checking out where we are and how RSI reacts.
This has nothing to do with trading. I just love charts. I didn't bother with 1W chart because I consider it common.
In the following charts SPX is analyzed. I could post them in a new idea but got bored...
2W - we couldn't escape the ribbon, and RSI is flirting with its EMA. It is a tad lower than 50.
3W - RSI below its EMA and below 50.
4W - A bull trap on the price appears. But we are above the ribbon (for now?). RSI just barely above 50.
6W - A bullish engulfing or something? And then an inverted hammer appears.
Even though stochastic RSI reached the bottom, this doesn't mean that there is enough buildup to push RSI upwards. It takes two to dance/grow. Also EMA of RSI is helpful to me. RSI passing it provides me with an early signal of trend change.
9W - In this chart, the similarities to 2008 end. It resembles the .com bubble burst. It resembles the region just before the October 1998 rally. This one is less grim to the charts before. The candle however is a little mixed.
12W - Kinda bullish? I dunno... RSI made a higher low
18W - 2014-2022 stochastic RSI shows clear divergence. Stochastic producing lower highs, and with this candle it is confirmed.
36W - RSI and it's stochastic show a close similarity to September of 2000, the .com bubble burst.
Finally, I will add this DJI chart showing us where we are in history.
Let the drop commence I guess?
#XAUUSD THE TABLE NOW HAS TURNEDThe uptrend has taken a pause naturally as it is struggling to break above the 4H MA200 (1,668.71), having failed to close a candle above it.
This is a strong sign of (short-term at least) profit taking.
As mentioned yesterday, the 4H MA50 (1,648.31) is the short-term Support, there is also a Higher Lows trend-line involved (1,653.90) starting from the October 21 Low.
In any case, the 1D MA50 (my end target on this week's buy) is now even lower at 1,686.73, so I am moving the SL even higher in profit (1,653.80) in order to considerably limit the risk.
If either the 1D MA50 or the SL are hit, I will be in no rush to re-enter either with a Sell or a Buy ahead of today's ECB Rate Decision and U.S. GDP.
1D remains borderline neutral (RSI # 48.291, MACD # -10.580, ADX # 21.918) and only a break above the 1D MA100 (1,731.55) can reverse the trend into long-term bullish.
If we close today below the 4H MA50 (i.e. news are digested), I will sell (TP # 1,620).
US10Y Huge Bearish Divergence on RSI calls a drop!The U.S. Government Bonds 10YR Yield formed Lower Highs on its 1D RSI while the price action has been trading on Higher Highs. This is a major Bearish Divergence that technically calls for a price reversal to the downside.
What's even more interesting is that every time the same RSI Bearish Divergence has been formed in the past 12 months, the US10Y always pulled-back and hit its 1D MA50 (blue trend-line). This is currently at 3.563 (and rising).
A reversal on the bond yields can have a major impact on the financial markets, especially ahead of next week's Fed Rate Decision, as it is negatively correlated with stocks and Gold.
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XAUUSD CURRENT MAJOR LEVELSGold continues to replicate the price action of September 26-28, with the price now below the 4H MA50 (which is at 1,647.10 on XAUUSD) but is holding the 1,634.60 low. This makes Gold a buy opportunity on a 1 week basis (target the 1D MA50 at 1,680), but we need to take into consideration Thursday's heavy fundamentals (ECB Rate Decision and U.S. GDP) as the long-term trend remains bearish (1D RSI # 42.106, MACD # -16.530, ADX # 30.971) so I'll keep my stop tight on the above level. Only a break above the 1D MA100 (currently at 1,735.16) can reverse the trend to a bullish long-term sentiment. As mentioned these past few weeks, the US10Y is primarily dictating Gold's trend and its 1D RSI is showing a bearish divergence (which is bullish for Gold). A closing below 1,634.60 would be a sell break-out entry for me, targeting 1,620.
S&P 500 & US10YFundamental :
10/21/2022 | 19:24
US equities surged mid-day on speculation about the extent of monetary policy tightening (thus media speculation about the path of interest rates after November).
Treasury (bond markets) yields fell following a Wall Street Journal report that some Federal Reserve officials are no longer comfortable with the pace of interest rate hikes.
The Fed has raised its target funds rate by 300 basis points since it began tightening policy this year. The probability of the Fed raising rates in November by 75 basis points is over 92%, according to the CME's FedWatch tool.
“Hope that the Fed can temper or take their foot off the accelerator slightly helps the market,” said Andre Bakhos, managing member at Ingenium Analytics.
The US Dollar Index depreciated 0.8% to 112. The greenback weakened 2% against the Japanese yen to 147.27, falling from its highest level in about three decades.
10/21/2022 | 22:50
The S&P 500 index is up 4.7% weekly as positive third-quarter results drive strong gains, particularly in the energy, technology and materials sectors.
This week's advance was driven by quarterly earnings that beat analysts' average estimates. Even as companies report challenges such as inflation and supply chain issues, many show they have still managed to beat street consensus estimates.
That contributed to a relief rally after stocks fell in the weeks leading up to the results on worries about the impact of macro issues including inflation.
All 11 sectors of the S&P 500 rose this week, led by an 8.1% jump for energy, 6.5% for technology and 6.1% for materials. Other strong gains included consumer discretionary, up 5.6%, and communication services, up 5%. The smallest increase was recorded by utilities, up 1.9%.
10/21/2022 | 22:50
Wall Street ends higher driven by hopes of a slowdown in monetary tightening.
Some Fed officials have signaled their willingness to debate whether and how to signal a plan for a smaller rate hike in December, according to the WSJ.
San Francisco Regional Fed Chair Mary Daly said the Fed should avoid pushing the US economy into an "unprovoked downturn" by tightening monetary policy too much.
Stocks rise on Friday as the media report fuels optimism that the Fed's stance is easing.
Technics:
Range and MMA20/MMA50 broken on the rise this Friday 21st by 4 candlesticks (on a 4H vision) then rebound at the $3820.0 level.
The Average Directional Index is below 25 which indicates a slide in the price of the asset in the short term (ADX based on a MA of a 14-day range), but is in the process of increasing.
Bearish short-term momentum pointing to an upcoming temporization zone, an idea reinforced by a Stochastic indicator above 80 (indicating an overbought zone).
In addition, there is high Volume at levels below the new support line ($3730.0), although this volume is mostly representative of the buying force.
Money management:
1 position BUY on US10Y
1 position BUY on S&P 500
US 10Y yield convergence of resistance levels around 4.19/20We have a convergence of levels around the 4.19/4.20 zone of the chart, it is a long term double Fibonacci retracement and represents significant lows seen in 1998 and 2001.
Will be quite interested to see if the market pauses here in order to consolidate sharp gains that have been pretty relentless since August.
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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.
Gamble at your own risk - Global Financial Crisis of 2022/2023Do not pray to the false gods of guaranteed bailouts.
"The problem with all this is that it's their own policies that created the fragility, their own policies that created the dislocations and now we're relying on their policies to address the dislocations," Peter Boockvar of Bleakley Financial Group said. "It's all quite a messed-up world." -CNBC
Not everyone survives.
10 Year Treasury real yields showing a clear sign that liquidity is collapsing, the fastest rise since 2008.
US10Y Pull-back aiming for the 1D MA50 at least.This is the U.S. Government Bonds 10YR Yield (US10Y) on a 2 year horizon. As you see its aggressive rise can fit only on a Fibonacci Channel. The recent pull-back happened after the price hit the 2.5 Fibonacci extension and the 1D RSI a largely overbought level and the price is already on the 2.0 Fib.
As you see, the strongest buys throughout this period have been then the RSI hit the designated Support Zone. Also the strongest pull-backs dropped the price a whole 1.0 Fib level lower. From the previous 2.5 High, the low extension is at 1.5 and that gives us still some room to sell and target at least the 1D MA50 (blue trend-line).
Technically it would be best to buy once the 1D RSI enters the Support Zone again, even if that means missing on the lowest possible level. From were we stand today that could be as low as the 1D MA200 (orange trend-line). Regardless of the exact bottom, as long as the 1D MA300 (red trend-line) holds, which has been supporting since January 06 2021, the bullish target is the 2.5 Fib and the 3.0 in extension.
If the price breaks below the 1D MA300 though, we will consider this a long-term trend change to bearish and should switch to a sell-the-rebounds strategy. That would affect all asset classes from stocks to Gold etc, but when that happens we will have plenty of time to analyze it.
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Morning Update: Bonds vs. The MarketYesterday I saw some comments about how bonds yields have come down recently and that is one of the components aiding the stock markets recent bull run. The above chart is the 10yr Treasury. If you could flip this chart upside down, it would be a chart of the SPX.
Here's my concern with this chart and how I'm looking at the SPX. This pattern is not done to the upside in the 10yr. It appears this trend continues well into 2023....where as I am looking for a bottom in the SPX this month or beginning of November. I believe every chart stands on it's own. But its hard to ignore the long standing inverse correlation between bonds and stocks. If this correlation continues into 2023...(I have no information to think I will not) then it is possible this low I'm looking for soon in stocks is just a larger A wave and this wave IV in the SPX and this pattern could drag well into new year.
We will know if the next decline in the SPX is one in which we loose any MACD positive divergence we have had on the daily SPX.
Best to all,
Chris
Updating this very old US10YThe bond bull is over and the new path to rising rates. It looks like we have reached the resistance of the red box , there is a chance we do an over shoot like we did at the bottom and then reverse to the green box ( which will be adjusted is the if we over shoot). Then we keep rising in a wave like manner.
Market recapWith the interest rate hike correlation to US10Y Bonds, as the rates are rising we are seeing demand for risky assets drop off, people are cashing out of these asset classes and money is moving to bonds, in consequence we are seeing the USD start gaining great strength.
The US10Y market is very interesting, as we appear to have broken a downtrend on the weekly chart going back decades, trendlines are neither here or that but with such a long history does this maybe add any more validity? (Who Knows).
Going forward we could see XAU make moves from its old value area and make a move down to pre-covid inflation around $1200-$1300.
I recently posted a short in the US stock market which I have attached below of where I believe the market will price in if what we are seeing in the rates and bonds continue to occur.
Crypto being the most risk adverse of assets discussed here and the volatility involved imo holds the greatest risk yet, although we could see this obscene dollar valuations as a rare occurance? maybe a DCA approach can lead to good returns overall. However I see large falls inbound whether they happen this week or next who knows, but it is a risky asset class to hold in potential market turbulence we could see over the next few months.