Focus Shifts to Greenback and the 10-year Treasury
The Federal Reserve triggered violent drops in stocks yesterday and two key charts could be attempting important breakouts.
We first consider the U.S. Dollar Index with weekly candles. There’s a falling trendline along the peaks of October 2023 and late April. DXY rallied through that resistance and turned it into support earlier this month. That may be consistent with an uptrend.
Second, DXY has advanced in 11 of the last 12 weeks. That could also suggest direction is accelerating higher.
Third, some traders may now eye the October 2022 high around 114 as the next key level.
Next is the 10-year Treasury Yield with 3-day candles (to clearly display almost 2 years of history):
A falling channel began in late 2023 at the same time stocks began their latest rally, but TNX didn’t reach the lower end of the channel. That was the first sign that yields might still be rising.
TNX also failed to reach its March 2023 low and refused to stay below its December 2023 low.
The index dipped last month but held its mid-July low above 4 percent.
Next comes the historically important long-term peak of 4.34 percent from the start of the Global Financial Crisis. After that, TNX closed above its November daily high.
Each of those points additionally suggest that that yields are moving higher. They also shift attention to the next big level near 5 percent from October 2022.
Given the importance of DXY and TNX for risk appetite, some traders may find potentially useful intermarket signals on their charts.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. If you're born to trade, we could be for you. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
We first consider the U.S. Dollar Index with weekly candles. There’s a falling trendline along the peaks of October 2023 and late April. DXY rallied through that resistance and turned it into support earlier this month. That may be consistent with an uptrend.
Second, DXY has advanced in 11 of the last 12 weeks. That could also suggest direction is accelerating higher.
Third, some traders may now eye the October 2022 high around 114 as the next key level.
Next is the 10-year Treasury Yield with 3-day candles (to clearly display almost 2 years of history):
A falling channel began in late 2023 at the same time stocks began their latest rally, but TNX didn’t reach the lower end of the channel. That was the first sign that yields might still be rising.
TNX also failed to reach its March 2023 low and refused to stay below its December 2023 low.
The index dipped last month but held its mid-July low above 4 percent.
Next comes the historically important long-term peak of 4.34 percent from the start of the Global Financial Crisis. After that, TNX closed above its November daily high.
Each of those points additionally suggest that that yields are moving higher. They also shift attention to the next big level near 5 percent from October 2022.
Given the importance of DXY and TNX for risk appetite, some traders may find potentially useful intermarket signals on their charts.
TradeStation has, for decades, advanced the trading industry, providing access to stocks, options and futures. If you're born to trade, we could be for you. See our Overview for more.
Past performance, whether actual or indicated by historical tests of strategies, is no guarantee of future performance or success. There is a possibility that you may sustain a loss equal to or greater than your entire investment regardless of which asset class you trade (equities, options or futures); therefore, you should not invest or risk money that you cannot afford to lose. Online trading is not suitable for all investors. View the document titled Characteristics and Risks of Standardized Options at https://www.TradeStation.com/DisclosureOptions. Before trading any asset class, customers must read the relevant risk disclosure statements on https://www.TradeStation.com/Important-Information/. System access and trade placement and execution may be delayed or fail due to market volatility and volume, quote delays, system and software errors, Internet traffic, outages and other factors.
Securities and futures trading is offered to self-directed customers by TradeStation Securities, Inc., a broker-dealer registered with the Securities and Exchange Commission and a futures commission merchant licensed with the Commodity Futures Trading Commission). TradeStation Securities is a member of the Financial Industry Regulatory Authority, the National Futures Association, and a number of exchanges.
TradeStation Securities, Inc. and TradeStation Technologies, Inc. are each wholly owned subsidiaries of TradeStation Group, Inc., both operating, and providing products and services, under the TradeStation brand and trademark. When applying for, or purchasing, accounts, subscriptions, products and services, it is important that you know which company you will be dealing with. Visit https://www.TradeStation.com/DisclosureTSCompanies for further important information explaining what this means.
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