In the previous Weekly Market Insight, I directed the technical spotlight to a long-term harmonic equivalent AB=CD bullish structure on the 5-year US Treasury yield weekly chart in a market trending higher since August 2020. The AB=CD zone, as you can see, has offered this market a technical floor since mid-March, denoted by the 100% projection at 3.243%.
What’s interesting, though, is on the daily timeframe we can see that the reaction from the weekly AB=CD floor has carved out a daily equivalent AB=CD bearish pattern at 3.757%. This, coupled with Wednesday’s bearish Shooting Star candle pattern and nearby dynamic resistance derived from the 200-day simple moving average at 3.700%, could be enough to motivate a downside move this week to test at least the 38.2% and 61.8% Fibonacci retracement ratios (derived from legs A-D) at 3.558% and 3.437%, respectively.
What’s interesting, though, is on the daily timeframe we can see that the reaction from the weekly AB=CD floor has carved out a daily equivalent AB=CD bearish pattern at 3.757%. This, coupled with Wednesday’s bearish Shooting Star candle pattern and nearby dynamic resistance derived from the 200-day simple moving average at 3.700%, could be enough to motivate a downside move this week to test at least the 38.2% and 61.8% Fibonacci retracement ratios (derived from legs A-D) at 3.558% and 3.437%, respectively.