Key Technical Bullets:
• Has been trading in a Head & Shoulder pattern since February
• Was recently rejected by key 2.81/82% level:
- Daily Ichimoku Cloud top
- 50% retracement of 2014 decline
- March high
• Coincided by daily RSI is failure ahead of key 60/65 level – Indicative of overall downtrend
• Broke below daily Ichimoku Cloud bottom at 2.68%
• Sees trendline support and H&S neckline around 2.62/63%
• Distance between the H&S top and the neckline is ~21 bps
• Daily RSI has broken below corresponding support in advance to yield
• Pattern becomes effective upon close below 2.62%
• If validated, Head & Shoulder measured move objective ~2.40/41%
• This corresponds with 38.2% retracement of the 2012-14 advance
Should US 10-year yield close below 2.62%, next levels to watch:
- 2.608% – Prior low
- 2.60% – Psychological & barrier/option related
- 2.568% – 2014 Low
- 2.50% – Psychological & barrier/option related
- 2.469% – Oct. 2013 Low
- 2.414% – 38.2% retracement
- 2.40/41% – Head & Shoulder measured move projection
Chart Source: Bloomberg, FOREX.com
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