Tuesday, December 29, 2009
I'm looking for a breakdown of the 1.04 floor tested in November and December - with first target 1.0220 /the October Lows/.
The Daily chart has all he MAs and the whole pattern coiling in a tight 350 pip range and I'm suggesting at some point it will produce a meaningful trend as CAD is known for a good trending vehicle.
Usually the first test out of the is a fake one /tnx to Gary Savage for this one/ and I'm working with the assumption that the 1.0745 high was the first test out of the coiling range - so now I'm looking for the 1.04 Support to give way.
Looking the reactive moves in EUR/USD & GBP/USD off the recent lows I'm very close to calling the new USD selling wave has just begun an early positioning for the New 2010 Year.
Sunday, December 27, 2009
Now we have a clear confirmation of that breakout and actually last week's candles both in Yield and UST 10-Yr Note price made meaningful Gaps and closed beyond long term trendlines that gives further credibility to the unfolding trends.
10-Yr UST Yield actually opened above both the long term trendline Resistance and the 2 recent consolidation Highs at around 3.60. RSI and ADX both look for continuation of the breakout and ADX actually is looking to turn up which means acceleration of the trend.
Targets and Ressitance clusters are at the 200-Week MA (4.08) and the Dec'07 & June'08 Highs around 4.30.
10-Yr UST Note slipped through the LT trendline Support and the recent Lows around 117. Unwinding of the long Treasury positions will see gradual layers of support first at June-Aug'09 lows around 114 > then the 200-Week MA (113.22) and finally the Oct'09 Low at 111.
Fundamentally the selloff in bond market is logical as we see gradual improvement in jobless and industrial production data. Positioning for coming inflationary forces and the steepening of the Yield curve add more fire to the unfolding trends in the present environment.
Tuesday, December 22, 2009
Sunday, December 20, 2009
2 month inverted 10Yr-2Yr US treasury Notes Spread to EUR/USD direction shows it provided a divergence signal.
Buying the long end of the US yield curve on the assumption of positive economic growth translated into higher USD demand.
The whole last 9 months we were in the tight SPX - EUR/USD correlation which was basically a risk taking/aversion trade.
Last 3 weeks since the USD reversed its trend we see the 10Yr-2Yr US treasury Notes Spread widening further and a sharp appreciation of the USD.
Saturday, December 19, 2009
Sunday, December 13, 2009
Last week I was calling for reversal in US Treasury Price and Yield.
Both Price and Yield of the 10-Year US Treasury Notes reversed their intermediate trends right at the 50-Week MAs.
As seen on the chart both are inside trend channels and bounced off the Trendlines and the prevailing scenario is they will break in the direction of the Longer term trend.
Yields closed last week at 3.55 High. There is Resistance levels confluence around 3.60 -3.75 and the break of that area will set target at the 200-Week MA at 4.08.
Bond prices reversed and closed for 2-nd week below the reversing 50-Week MA and bounced off the Trend channel top to lead its way into the projected 117 channel bottom. Breaking that support leads us at the Support confluence of Long term 114.50 Resistance/Support; the June - July Lows and also the 200-Week MA coming at 113.12 right now.
ADX trend strength has been at its lowest levels in the last 3 years and that would suggest we might be right before a trend acceleration once the course has been set. The recent USD appreciation along with latest positive US economic data signals a change in recent correlations and a turn back into more classic relationship: buying the currency of those going out of the recession first.