Near term US 10 year note yield outlook:
The market has indeed retested the base of the wide 2.31/2.64% range that has been in place since Dec. As been discussing, seen forming a "flag" type consolidation over that time, generally seen as a continuation pattern and "ideally" suggesting an eventual upside resolution of the ceiling 2.64% ceiling (see in red on daily chart below). However, a couple of concerns…First off this "ideal" view is quite "obvious" (when most have the same view, it more often tends to be wrong), with lots of stops likely below the base, 2.29/31% area. Also, there is scope for near term volatility on Friday’s US payroll report (potential "false break" of that key 2.29/31% support area ?). Though these factors do not change that "ideal" bullish view, they clearly are concerns. Nearby resistance is seen at the bearish trendline from mid March (currently at 2.38/40%) and 2.46/48 (50% from the Mar 13th high at 2.63%). Bottom line: "ideally" important low with eventual gains above 2.64%.
Strategy/position:
Reached the target/buy from the Mar 30th email at 2.33% on Apr 3rd, and for now would continue to stop on a close below 2.27% (just below that key 2.29/31% area). Despite those nearer term concerns, the limited risk still makes for a good risk/reward.
Long term outlook:
As mentioned above, an eventual upside resolution of the 2.31/2.64% that has been in place since Dec is favored and fits the long held view of eventual gains back toward that Jan 2014 high near 3% (see "ideal" scenario in red on weekly chart/2nd chart below). Over the very long term, the huge ranging since the Jun 2012 low at 1.38% is seen as a huge complex/flat type correction* and targets gains toward that ceiling at 3.05% (and even slightly above, see in red on weekly chart/2nd chart below). Note that a break below that key 2.29/31% support area would not necessarily abort this bigger picture bullish view, though it argue at least some further downside and put that view on hold. Further big picture support below 2.29/31% there is seen at 2.12/15% (38% retracement from the Jul 2016 low at 1.32%) and 1.95/98% (both the bull trendline and 50% retracement from that Jul 2016 low).
*For those familiar with analysis, the 3 wave decline from the Jan 2014 high at 3.05% to that slight new low at 1.32% on July 2016 (A-B-C) argues a huge "complex" consolidation. Preferably a large flat (breaks down to a series of 3-3-5 waves) and thus that target back to the 3.05% high (ceiling of the multi-year range). Bottom line : eventual up resolution of 2.31/2.64% range since Dec with gains back toward 3.00/10% favored. Down resolution would argue deeper pullback first.
Strategy/position:
Also switched the longer term bias to bullish on Apr 3rd at 2.33% and would use the same exit as the shorter term above to switch to neutral (again a very good risk/reward given the limited risk).
Current:
Nearer term : long Apr 3rd at 2.33% "ideally" for eventual gains above 2.64%.
Last : long Feb 24 at 2.34%, took prof Mar 15 below base of channel (2.57%, closed 2.50%, .16 prof).
Longer term: bullish bias Apr 3rd at 2.33%, neutral on close below 2.27%.
Last : bull bias Feb 24 at 2.34% to neutral mar 15 at 2.50%.
