By Christopher Diodato – TradersBase.com
Here’s a longer term warning I’m finding in bonds, specifically, the ten year treasury. It’s a bearish divergence signal, much like the two signals that occurred in fall 2010 and 2011. Both of these divergence signals were followed by a 5% decline in the price of the bonds in the next six months. Here’s the chart.
Of course, this is only a warning, and there will not be a signal until we have a break below the lower trend channel. That may not be for weeks, or even a month or two. Isn’t it interesting, however, how we almost see a seasonal pattern in this chart? Bonds top in summer, then decline in fall? Anyway, here’s the video with the analysis.