Ten Year Note Yield – At Weekly Resistance or Daily Support?

Mar 12, 2009: 9:31 AM CST

What happens when a Security appears to be coming into resistance on the weekly chart and holding at support on the Daily Chart?  Let’s follow the Ten-Year Note Yield ($TNX) Chart to find out.

It’s almost like the question, “What happens when an unstoppable force meets and immovable object?”  Answer = Definitions Change.

Ten Year Note Yields ($TNX) Weekly:

It you take an objective look at the Yield chart (you interpret the ‘price’ as a percent, as in the “last” price was 28.95 which actually corresponds to 2.89% – just move the decimal one point to the left), then the analysis should leap off the chart to you – “It’s a Bear Flag into key resistance via the 20 week EMA.”  The current candle (which closes on Friday) is forming a shooting star – that’s even more bearish.

The weekly structure is in a downtrend as price has continued to make new lows and lower highs.  The moving averages are in the most bearish orientation possible.  It’s clear the 3.00% level is serving as key resistance.

So what is the lower-timeframe structure saying?

Ten Year Note Yields ($TNX) Daily:

I’m using a “Color Chart” just to give a different and perhaps more interesting perspective.

We still see the resistance about the 3.00% (30.00) level, but the picture doesn’t quite look as bearish.

In fact, price has broken above the 20 (green) and 50 (blue) EMAs, they have crossed bullishly (forming the “Cradle”), and price has successfully supported upon it.

In addition, price is forming a consolidation which may be described as an “Ascending Triangle” which traditionally has bullish implications.

The momentum oscillator is showing slightly negative readings.

So which will it be?!

A Bear Flag into EMA Resistance on the Weekly Chart or

An Ascending Triangle forming at Confluence EMA Support on the Daily Chart?

It may be best to stand aside and wait to see which pattern/structure fails and which succeeds.

Corey Rosenbloom
Afraid to Trade.com

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