US10Y Rejection not confirmed yet. Bullish unless this breaks.The U.S. Government Bonds 10YR Yield (US10Y) is having a 2-week rejection since the August 22 High that was priced marginally above the 4.336 Resistance. However both the 1D MA50 (blue trend-line) as well as the Higher Lows trend-line that moves just below it, remain intact, maintaining the long-term uptrend.
Today is the ideal spot for a new buy entry, targeting 4.365 (August 22 High). We are only willing to turn short after the price breaks below the Higher Lows trend-line and closes a 1D candle below the 1D MA50. In that case, we will sell and target 3.810 (Fibonacci 0.5 level).
Notice also the 1D RSI which just hit its own Higher Lows trend-line that is holding since March 15.
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Ustreasury10yearsyield
🪙 Gold (US$ / OZ) | Wednesday 31/5/2023 🪙Gold (US$ / OZ) | Wednesday 31/5/2023 | Ethan Smythe
Fundemetal
Gold prices rose higher at market open on Tuesday in response to a fall in US Treasury Yields following Washington's push to raise the US debt ceiling. This development sparked optimism with respect to recent fears of a US debt default on Tuesday. Congress now has up until June the 5th to consolidate this policy which still presents a degree of uncertainty as to whether this outcome will be met. Joe Biden went on to express his confidence and reassurance to markets that the debt will bill gets passed by the Senate. So what's the verdict? We anticipate that should the bill get passed we could see US yields continue to fall putting further upward pressure on gold throughout the remainder of the year.
Technical
From a technical standpoint, gold is currently trading at the bottom of its monthly upward channel and appears to be showing significant signs of strength. This strength appears to be the result of previously mentioned fundamental drivers. As of now, gold is testing the 200 MA, if we can get a clear break of the 200 MA and find support above this key level we should expect to see price raid the $2000 level. Provided this outcome does in fact occurs we further anticipate significant resistance at the $2000 level as buyers begin to realize gains. This would be an optimal level to set a profit target on any longs taken on the break of the 200MA. After price has begun to settle and the bulk of profit-taking has occurred we expect buyers to accumulate and break the $2000 level. If the price finds support above $2000 and breaks its previous ATH we expect gold to try and reach the top of its channel at around $2100.
FED Fund Rate, US Bonds and Inflation PredictionThe blue line area shows the historic and current FED's Fund Rate.
Looking back in the past it appears the US10Y (yellow line) is predictive of FED's fund rate upper target (orange arrows).
The US3M (turquoise line) seems to be a good indicator to get a feeling for the FED's fund rate short-term up or downward trend.
In the FOMC Summary of Economic Projections Jun 15 '2022 the FOMC had the midpoint of target range or target level for the federal funds rate at around below 4%
2022: 3,39% midpoint, 2023: 3.78%, 2024: 3.01% and >2024: 2,24% (ghost feed in the red box on the right).
So all that noted it would appear the FED Funds rate is to be expected at just below 4% at around 3.8%.
The next FOMC meeting will give as an update on that from the perspective of the FED.
And as a general indicator you need to know the FED uses the 10 Year- 3 Month Treasury Yield Spread (white line) as follows:
The 10 Year- 3 Month Treasury Yield Spread is the difference between the 10 year treasury rate and the 3 month treasury rate.
This spread is widely used as a gauge to study the yield curve. A 10 year-3 month treasury spread that approaches 0 signifies a
"flattening" yield curve. Furthermore, a negative 10 year-3 month spread has historically been viewed as a precursor or
predictor of a recessionary period. The New York Fed uses the rate in a model to predict recessions 2 to 6 quarters ahead (white arrows).
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Trend Reversal in US 30 Years Bonds? Investment Opportunity?A longer term look at the US 30 Year Bonds reveals that the yields have broken to the upside of 2 standard deviation of the linear regression channel.
In a way bonds have already executed the FED rate hikes.
You can get around 3% yield on a US 30 year bond.
Question is if the bond market will track lower increasing yield rates even further.
Depending on your investment strategy this may be worth considering.
I am still puzzled why not more money is not pouring into USD stablecoins as one get get e.g. 15% yield with UST on Nexo.
That appears to be a no brainer, still there is some risk associated with the platform, but not too much more then with a bank.
In any case US bonds are attractive assuming the FED will eventually be forced to pause rate hikes.
Then a 3% yield with a potentially rising bond is a sweet deal.
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US 10 YEARS - W1 - BEARISH ENGULFING !Weekly (W1)
After a RSI bearish divergence detected the week before, the last week price action triggered a "Bearish Engulfing pattern" which should be seen as a second
warning signal calling for a trend reversal !
Indeed, looking back we can see 2 clear trends and in monitoring the ongoing uptrend we can easily see the failure to confir m an upside breakout of the ongoing
uptrend channel.
So, looking forward, it is likely to see further downside towards 1.4850 % first (38.2 % Fib ret & Tenkan-Sen), ahead of 1.4170 % (50% & Kijun-Sen).
Mid-Bollinger Band, slightly below and currently @ 1.40 % should again be seen as the barometer indicator, having in mind the following mood :
Above 1.4000 % bullish (yield) and below 1.4000 % ( bearish yield)
Interesting to note that a failure to stay and hold above 1.4000 % on a weekly closing basis would confirm a downside breakout of this ongoing uptrend channel and potentially
open the door for a new downtrend move, calling for 1.35 % - 1.25 %.
On the upside, only a clear breakout of the former high @ 1.7060 would neutralise the downside risk and would open the door for higher level towards 1.80-1.90 (former congestion top)
Daily (D1) :
Failure to recover both above TS and Mid Bollinger band on a daily closing basis should also be seen as a negative signal, calling for further downside. In addition, the 10 Years US Treasury
is currently flirting with the Kijun-Sen important level support @ 1.550 %.
A daily closing level below 1.55 % would also add further selling pressure (yield) which would open the door for the levels above mentioned in my W1 analysis.
On this time frame, very interesting to note that the clouds support area coincides with the Fibonacci retracement, 1.4170 % and 1.3480 %, being respectively the 50 % and 61.8%.
CONCLUSION :
Watch the clouds on shorter intraday time frames which will help you to get intermediate signal (s) for validation or invalidation of the scenarios above mentioned.
H 4 : below the clouds
H1 : bottom of the clouds under attack
M30, M15, M5 : below the clouds
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