US 2-Year Futures
Pause to test break
The two-year futures broke a bear flag pattern and stopped at the Monthly Pivot S2. We will likely see a temporary pause and a verification of the broken flag.
· If the bear flag break is tested, the 102'10 resistance should be maintained during the recovery. A support level of 2.50% is of psychological significance.
· In this downward trend, futures will likely test the support and Quarterly Pivot S1 at the 101'17 (grey) area.
The 2-year HLC Bar chart is difficult to read due to spikes in the data. To improve clarity, I used a closing line chart instead. Additionally, it may be beneficial to consider utilizing more reliable data sources for drawing trend channels.
· The 2-year yields have strong support at 4.31% during a correction, supported by the Ichimoku Cloud and Monthly pivot R1. However, it is unlikely that there will be a significant drop. It is more probable that the trend high has not yet been reached, and there is a possibility that it will reach 4.62-4.68% to test resistance and complete the bull flag pattern.
A bull flag is not yet confirmed but it is a distinct possibility. The parallel channel tool with a 61.8% line helps visualize the contours of price moves and likely resistance levels.
US 2-Year Futures
Yesterday's price was supported at the monthly Pivot S2 of 102'00, where a pause is warranted.
We can see support at previous lows and the Quarterly Pivot S2 of 101'17, which is the likely price target.
It is hard to develop fundamental drivers yet why the price could fall to new lows. We will only make new lows if this is a bear flag.
US 2-year Yields
According to the HLC bar chart, there seems to be a gap at 4.58, while the Monthly Pivot R2 is at 4.62. Typically, gaps in the chart are filled. Therefore, the yield will likely reach 4.62% as the gap is filled.
In my initial note, I recommended a target range of 4.62% to 4.68%. The upper end of 4.68% is based on the Bull Flag trendline. However, even if this is a bull flag, it's unlikely that we will break it on the first attempt. Instead, we may go through a phase of forming a trend channel by creating more touch points at the upper trend of the channel.