Chart Advisor: Daily Yield Chart – A Bullish Engulfing

By Todd Stankiewicz CMT, CFP, ChFC

1/ Daily Yield Chart – A Bullish Engulfing

2/ Weekly Chart: Momentum Holds

3/ Monthly Yield Chart – Bollinger Bands Signal a Big Move May Be Ahead

Investopedia is partnering with CMT Association on this newsletter.  The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.

1/

Daily Yield Chart – A Bullish Engulfing

The Fed cut rates by 25 basis points yesterday, exactly as expected. The equity market had this move priced in, so the more interesting action showed up in Treasuries. Instead of continuing lower, the 10-year Treasury yield ($TNX) bounced sharply.

Yields dipped below 4 percent intraday and then finished a little over 4.07 percent. That reversal created a bullish engulfing pattern on the daily chart, which is a technical signal that often points to a short-term shift in direction. Since yields and prices move opposite of one another, this tells us Treasury prices may move lower and yields may head higher in the days ahead.

We have seen this before. Back in September 2024, yields fell into a Fed cut and then turned higher afterward. That reversal led to a multi-week rally in yields. The setup today looks very similar.

The daily chart is flashing short-term volatility. Inflation and labor reports will be the catalyst, and investors should be ready for quick swings as the market reacts to what the Fed actually does versus what is already priced in.

2/

Weekly 10 yr Chart – Pennant Pattern Near Resolution

On the weekly chart, the story gets more interesting. The 10-year yield is sitting right above key support near 4%, with another zone of support closer to 3.3%, which lines up with peaks from 2018 and 2022.

Since early 2024, yields have been forming a pennant pattern. Pennants usually act as continuation patterns, meaning the prior trend continues after the consolidation. In this case, the prior trend is towards higher yields.

Yesterday’s bounce came right at the lower trendline of the pennant and off the 4 percent support level. That adds weight to the idea that this pattern is valid and raises the odds that the breakout may actually be higher. The range is getting tighter, and the market is running out of room. A sustained move above 4.2% would point toward a retest of 4.3 to 4.4%, while a move below 3.9% would set up a test of 3.3%.

The pennant on the weekly chart is getting close to resolution. Expect more choppy trading inside this range until the breakout comes. Investors need to be ready for momentum to accelerate once yields pick a direction.

3/

Monthly Yield Chart – Bollinger Bands Signal a Big Move May Be Ahead

The monthly chart gives us the bigger picture. The Bollinger Band width, which measures volatility, has been narrowing. Each time we see that happen, it marks a period of consolidation. History tells us that narrow bands are usually followed by a big move, often to the upside in yields.

Right now, the bands are tight again, lining up with the pennant pattern we see on the weekly chart. That means the 10-year yield is in a holding pattern, but it will not stay this way much longer.

If inflation pressures stay sticky, yields are more likely to break higher, testing 4.4% or more. If inflation cools, yields could break lower toward 3.3%. Either way, the odds are low that the 10-year yield is still at 4% a few months from now.

The monthly chart reinforces that a bigger move is coming. This is not a setup to try to front-run. Let the market break first, then react. The outcome will be shaped by inflation data and how policy evolves, and the fallout could have ripple effects across equities, housing, and credit.

—

Originally posted 18th September 2025