This Bullish Pattern Signals A Surge To 3.25% On The 10 Year

The 10 year yield continues to hover below the recent high of 1.75%. Based on a classic bullish inverse head and shoulder pattern, get ready for the 10 year yield at 3.25% within a year. This signals tightening by the Federal Reserve as well as more robust inflation than the market is pricing in. It is also a bearish signal for the stock market, specifically technology stocks. The head and shoulder inverse pattern can clearly be seen in the stock chart below.

Note the neck-line which currently sits around 1.70%. The neck-line is the breakout line. Meaning, when yields trade back above 1.70%, the breakout will begin to the 3.25% level. Please note, it will not go there in a straight line. Take a look at the chart below.