USD 10 and 2 Year Yields
The US 10 year yield from current 2.474 is ranging between longer to intermediate term averages between 3.182 above and many supports below beginning at 2.424, 2.339 and 2.183. The price at 2.47 remains above June’s monthly close ar 2.402 and 2.123 in May. When last price closed at 2.47 on a monthly averages basis was August 2014 at 2.49 and June 2013 at 2.56. The 10 year yield distribution begins from 3.18 above to next 2.33, 2.42 and 2.18. The point at 2.33 is a misaligned average and should be located either above 3.18 or below 2.42. Below 2.42 would see a more perfect distribution as 2.18, 2.33, 2.42 then 3.18. The current range however remains between 3.18 – 2.42 and wide.
The point at 3.18 is not ready to see a price break higher. With price rises, the point at 2.18 becomes overbought as is the current market condition. The targets range from a high of 2.86, 2.74, 2.44 and 2.13. The misaligned average at 2.33 is why models reveal the higher 2.86 target while the point at 3.18 targets 2.13. Due to the Greek crisis and distortd price moves expected, its imperative to view 2.44 as short or long opportunity. Current price from 2.42 is severely oversold yet at a crucial juncture. A break below targets the next average at 2.33 to see a range between 2.33 – 2.42.
2 Year Yield
The 2 year yield from current 0.715 sees a larger range between 1.64 above and 0.56 below. A price break at 0.56 would target next averages below at 0.462 and 0.398. Averages at 0.46 and 0.39 are severely misaligned and should be located either above 1.64 or below 0.56. To exceed 1.64 is not likely anytime soon. Yet what dictates current price moves are points at 0.39, 0.46 and 0.56. From current 0.71, price is way overbought. To offer context, price extremes are seen at 0.79, 0.82 and 0.85. Current targets are located at 0.63, 0.58 and 0.54.Current price at 0.71 exceeds June’s monthly average at 0.68 and the highest close price last seen 53 months ago at 0.83. The point to watch closely is 0.56. A break below would see a new range develp between 0.56 – 0.46. The strategy moving forward is sell preferred due to way overbought conditions.
Brian Twomey Inside the Currency Market btwomey.com