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Over the past 7 years a setup of, channel support, oversold momentum and very few bulls lead to declines in the 10-year yield of 15% to 60%!
What was the flip of the yield declines? These large yield declines resulted in large bond market rallies.
The above chart reflects the setup of support, oversold momentum and few bulls took place four times since 2006. Now the set up is taking place for the 5th time.
In 2011, the set up took place as week as a “Bullish Inverse Head & Shoulders” pattern, resulting in yields tanking and bonds blasting off.
The set up this time could also be taking place with another “Bullish inverse head & shoulders pattern” at hand at (2) in the above chart. If yields break the neckline at (3) in the above chart, yields could fall a good deal more, resulting in another strong rally in bonds!