Chart courtesy of Mortgage News Daily. Annotations by Mish.Three Technical Possibilities, One Dismissed

We can discard the red H&S pattern because it failed. The blue and green patterns are valid, simultaneously.The slanted H&S pattern broke in the required direction forming a bull flag in the process. The slanted H&S pattern is still intact as long as the green trendline is not broken.Q: So you are saying mortgage rates may rise or fall?
A: CorrectAs funny or ridiculous as that sounds, technical players long mortgage bonds would have taken profits when rates stalled near 6 percent.The key purpose of TA is to provide entry and exit points for trades and that horizontal red line performed beautifully cautioning mortgage rate bulls to exit their longs.Technically speaking, there is no safe entry here because there is no reasonable place to put a stop.10-Year US Treasuries Image courtesy of StockCharts.Com, annotations by MishThe 10-year US Treasury chart is a much easier to understand technically.Assume one took a technical position betting on a bond rally on any of those three red candles in boxes.The first one is a questionable but possible entry. The next two were great entries with easy stop-out points at the then-recent high.Technical traders would have stayed in the long position, taking profits at the blue trendline (strong technical support) expecting a bounce in yields.What now?Technical traders as well as fundamental traders who use TA as a supplement might contemplate a long trade here with as stop just above this level, if they think the next economic reports will be bond-friendly.I am open-minded for the time being. I also suspect the next jobs report, days before the election, will be miserable.Those who think the BLS will manufacture a good jobs report to aid Harris would want no part of this idea.Fundamental vs Technical TradingFundamental traders can be wrong for a long time.Good technical traders have stops close by and get stopped out earlier. But technical traders are much more subject to whipsaw.Some combine the two.Are Bond Market Yields Rising Due to a Surge in Trump’s Election Odds?Earlier today I addressed the question Are Bond Market Yields Rising Due to a Surge in Trump’s Election Odds?My answer is no. Correlation is not causation and a close look shows that three out of four bond yield surges are directly in response to same-day economic news.It’s amusing the credit people assign Trump, both ways.Harris supporters say bond yields show Trump will raise inflation. Trump supporters say bond yields show Trump will deliver a stronger economy.But it’s not about Trump, at least right now. Yields rose on stronger than expected economic data.My long-term prognosis isn’t that great, no matter who wins, especially regarding tariffs.For discussion, please see Trump Will Raise Taxes and Increase the Price of GoodsDavid Stockman suggests that’s the price we pay to avoid Kamala Harris.More By This Author:Are Bond Market Yields Rising Due To A Surge In Trump’s Election Odds?
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