Yield Down, Price Up. Well Done Bond Buyers

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The move lower in bond yields is in line with our previous view (driven by the model/Tactical Trading Guide) that yields had become overbought (above 4.7%) in the short and medium term and that a risk of a bearish reversal was possible. At current levels we are seeing a potential bear flag technical formation support by poor candle structure on the yield.

US 10-Year Bond Yield Chart as of Friday 28 March (U.S. Trading Session)

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Previous Post: U.S. 10-YEAR BOND YIELD Bullish Momentum However, Approaching Short Term Overbought (08 January 2025)

Overall Summary

The image presents a price action analysis for the US 10-Year Bond Yield, focusing on three timeframes: Short Term (1-10 days), Medium Term (2-4 weeks), and Long Term (5-8 weeks).

Key Observations

7-Day Trend: High Bullish Momentum, Approaching Overbought

14-Day Trend: Very Bullish

Short Term (1-10 days): Price Action Reading: Very Strong Move, Buyers in Control, but Don't Chase - May Fail to Hold the Highs; If it doesn't hold, the 8-EMA may be a short-sell target.

Medium Term (2-4 weeks): Price Action Reading: Aggressive Buying but Do Not Chase - Look for Overshoot or Failure to Hold Prior Session Highs to Short-Sell Back to the 8-EMA.

Long Term (5-8 weeks): Price Action Reading: Attempting to Advance Whilst in a Bullish Regime - If it Pulls Back, Use Prior Session Close or 8-EMA as an Accumulation Zone.

Interpretation

Bullish Momentum: The price of the US 10-Year Bond Yield has been rising strongly in the short term.

Caution: The momentum is approaching overbought territory, suggesting a potential reversal.

Trading Strategy:

Short-term traders: Be cautious of chasing the price higher. Look for signs of weakness (like a failure to hold recent highs) to potentially short-sell.

Medium-term traders: Avoid chasing aggressive buying. Look for opportunities to short-sell if the price overshoots or fails to hold prior session highs.

Long-term traders: Maintain a bullish bias. If the price pulls back, consider accumulating (buying) near the prior session close or the 8-EMA support level.

Lester Davids

Analyst: Unum Capital