A week ago bonds signaled readiness for reversal. This week candles sent a clear bearish signal. The weekly bearish odds are very high.
I’d like also to remind that the monthly #US10Y candle closed in April above the 200 monthly MA for the first time since 1985! On May 6th, US10Y stretched the weekly RSI to 81.58, the third highest ever. Apparently these events were just the early warnings.
As you can see on the chart below, the monthly candle shapes up as a bearish one and is on track to return below the 200 MA.
The weekly (right chart) US10Y confirmed Dark Cloud Cover and is expected to move lower. The $IEF (middle) made a mirroring confirmation at the bottom.
The 2-day US10Y candles (left) formed a Falling 3 Methods strongly supported by technicals.
The bearish odds are quite high and a reversal at this point would be unusual.
If we look at the waves, the overlaps of major waves are striking, signaling a possible completion of an ending diagonal and a sharp correction towards the level of origin. Note that a “sharp” correction on the weekly frame would mean a decline for multiple weeks or even months with several bounces down the road.
Expect US10Y to continue downwards for multiple weeks/months. Possible targets are on the EW chart.
If you would like to know how Ending Diagonals work, this is the most recent call on $GDX. An early recognition of an ending diagonal allowed me to forecast a 30% move down:
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This analysis is part of Weekly Series – US Indices, Cryptocurrencies, Commodities, Currency, and some Large Cap stocks – that can be fully viewed here.