FVX
FVX 5 Year Treasury Yield: Longer Term Outlook for RatesFVX Longer Term Outlook for Rates
Since Yellen retired in February FVX has risen to test the the junction of the upper parallel at the same point in time as it hit the fixed resistance line at 29.83. Since then it's been consolidating inside a slowly forming pennant formation with a spike down to the 25.46 line almost exactly before it pushed higher again.
Though it's likely to spend some more time messing inside the pennant, eventually the upper parallel is going to give way leading a spurt higher to 37.22 and then after consolidating some more should beat 37.22 and push higher to 52.39.
That's the most likely stopping point for interest rates from that point - until wage inflation pops even higher, forcing the Fed to follow long again on rates, whether the President approves or not.
Big spread between 5 y to 30 y treasuriesWatch this immense gap between the 5 y treasuries and the thirty years bonds. It will close sooner or later and I don´t expect the 5-y to fall or not far enough to close it.
We´ll see probably a fast rise of yields in the 30- y bonds and this will cause much losses to the investors who are not aware of this.
Sure, the indicators are signalling a correction in the near time. But with the FED prognosting more little steps of rising interest rates, a shorting of the QE and with positive signals coming from economy and labour market, I expect the yields going up in the long run.
5 years treasuries in bullish flagthe course of the 5 years treasuries have rosen from 1.62$ to 2.60$.
Even if the market expectations for higher interest rates are still active we can see a little consolidation on this level - which is the fib retracement 100.
After the consolidation in this flag pattern we can expect a continuation of the rise to prices around 2.90$ (fib extension 1,272%).
RSI: a little bit weaker but still in buy zone
ADX: DI+ just turned to up, but low momentum
conclusion:
no change in trend, only some consolidation