Near term U.S. 10-Year note yield outlook:
In the Apr 13th email warned of another few days of consolidating, but once again affirmed the bigger picture view since March of eventual new lows below that Feb 11th low at 1.53%. Note that the action from that Feb low is seen as a correction (wave 4 in the decline from the Nov high at 2.38%), was likely complete at the Mar 16th high at 2.00%, and in turn targets those new lows (within wave 5). Additionally on a very short term basis, the choppy trade from the Apr 7th low at 1.69% is seen as a correction (wave iv in the decline from that Mar 16th high), and adding to the view of further declines ahead (within wave v, see in red on daily chart below). Key resistance remains in the 1.85/87% area (50% retracement from the 2.00% high, bottom of wave i, Feb 17th high and the bearish trendline from Dec 30th) as a break/close clearly above would put this view on hold. Further support below that Apr 7th low at 1.69% is seen at 1.63/65% (Jan 2015, Feb 2016 lows). Bottom line: last few weeks of consolidating viewed as a correction, and with a resumption of the declines below that long held 1.53% seen near.
Strategy/position:
Still short from the Mar 3rd resell at 1.83%, and for now would continue to stop on a close .02 above that bearish trendline from Dec 30th.
Long term outlook:
No change in that very long held view of a huge falling wedge since 2003 and an extended period of wide, ranging lower (with good sized bounces along the way). These patterns break down into 5 legs and continues to target eventual declines below that long mentioned June 2012 low at 1.38%. Though this "fits" the nearer term view of declines below that Feb low at 1.53% (see shorter term above), there is some risk for a limited initial decline (another quick spike?) and more extended period of broad ranging (at least a few months) before those eventual declines below 1.38% are seen (see in red on weekly chart/2nd chart below). Important resistance remains at the ceiling of the huge wedge (currently just above that June 2015 high at 2.50%) as a clear break above would argue that a more major bottom is already in place years). Bottom line : still in large falling wedge since 2003 with long held view of declines below that June 2012 low at 1.38% still favored (some risk for a more extended period of ranging first).
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