Treasury Interest Rebound Favored to Continue

February 15th, 2015
in contributors

by Erik McCurdy, Prometheus Market Insight

The following technical and cycle analyses provide short-term forecasts for the 10-year Treasury note yield. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast.

Follow up:

Technical Analysis Yields closed moderately higher today, returning to recent short-term highs above previous lows of the downtrend from April. Technical indicators are moderately bullish overall, favoring a continuation of the rebound from early February.

Cycle Analysis We are 9 sessions into the rally phase of the cycle following the short-term cycle high (STCH) on January 22. A quick reversal followed by a move below the last alpha low (AL) at 1.65% would reconfirm the current bearish translation and favor additional short-term weakness. Alternatively, an extended rally phase that moves well above the last STCH at 1.94% would signal the likely transition to a bullish translation. The window during which the next STCH is likely to occur is now through March 6, with our best estimate being in the February 17 to February 23 range.

  • Last STCH: January 22, 2015
  • Cycle Duration: 16 sessions
  • Cycle Translation: Bearish
  • Next STCH Window: Now through March 6; best estimate in the February 17 to February 23 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A close well above congestion resistance in the 2.05% area would reconfirm the uptrend from early February and forecast additional gains.
  • Bearish Scenario: A reversal and close below the middle of the Bollinger bands at 1.85% would predict a return to the previous low of the downtrend from April at 1.67%.

The bullish scenario is more likely (~70% probable).

US Dollar Index Daily Chart Analyses

This is an update of the post of 13 February 2015.

The following technical and cycle analyses provide short-term forecasts for the US dollar index. For intermediate-term outlooks see the latest intermediate-term forecast and for long-term outlooks see the latest long-term forecast. Technical Analysis The index closed near unchanged today, holding below previous highs of the uptrend from July. Technical indicators are effectively neutral overall, suggesting that direction is in question. The uptrend has become extremely overbought and it will be followed by a violent overbought correction.

Cycle Analysis We are 2 sessions into the alpha phase decline of the cycle following the short-term cycle low (STCL) on February 5. A quick rebound followed by an extended beta phase rally that moves above the previous alpha high (AH) at 95.85 would reconfirm the current bullish translation and favor additional short-term strength. Alternatively, a move well below the last STCL at 93.68 during the alpha phase decline would signal the likely transition to a bearish translation. The window during which the next STCL is likely to occur is from March 4 to March 18, with our best estimate being in the March 9 to March 13 range.

  • Last STCL: February 5, 2015
  • Cycle Duration: 6 sessions
  • Cycle Translation: Bullish
  • Next STCL Window: March 4 to March 18; best estimate in the March 9 to March 13 range.
  • Setup Status: No active setups.
  • Trigger Status: No pending triggers.
  • Signal Status: No active signals.
  • Stop Level: None active.

Short-term Outlook

  • Bullish Scenario: A rebound and close above the previous short-term high at 95.51 would reconfirm the uptrend from July and forecast additional gains.
  • Bearish Scenario: A close well below the middle of the Bollinger bands at 94.39 would predict a return to the bottom of the Bollinger bands at 93.03.

Both scenarios are equally likely.









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