NQ–2Y CorrelationThis indicator tracks how NQ (Nasdaq futures) moves compared to the US 2-Year yield (US02Y). Most of the time, they go in opposite directions. This tool highlights when that relationship breaks down or moves too far from normal. This is an important fundamental indicator of overbought and oversold conditions in the market.
Features:
Stretch Measure (Z-Score): Shows when NQ is moving much more than you’d expect relative to the 2Y. Extreme readings (above the upper red band or below the lower blue band) often indicate overbought (red) or oversold (blue) conditions.
Correlation Tracking: Monitors whether NQ and 2Y are moving together or apart. Very useful to know when they are moving together, because one of those moves is false and represents an opportunity more often than not if combined with logical support or resistance.
Signal Dots: Green dots = both moving strongly in the same direction (rare). Red dots = strong move in opposite directions.
How I like to use it:
Watch the Z-Score bands (red/blue) for signs on the H1 or H4 that the move is really stretched. I use this for reversals in the direction of the trend.
Use the green/red dots to catch unusual synchronized or opposing moves between equities and yields.You can use this with your favourite equities that make up the nasdaq 100 too.
02yr
NQ–2Y CorrelationThis indicator tracks the relationship between the Nasdaq futures (NQ) and the US 2-Year Treasury yield (US02Y). The two typically move in opposite directions. This tool highlights when that relationship breaks down, and when moves become stretched to extremes. This can be useful for traders to find inflection points in price representing either overbought or oversold extremes.
Key Features
Residual Z-Score: Shows how far NQ’s returns deviate from what would be expected given moves in the 2Y. Useful for spotting stretched conditions (+/- 2σ bands).
Correlation Tracking: Fast and slow correlations between NQ and inverted 2Y returns. Helps identify regime shifts in the relationship.
Same-Direction Signals: Green dots mark when NQ and 2Y both move strongly in the same direction (rare alignment). Red dots mark strong opposing moves.
Alerts: Triggers available for residual stretches, correlation flips, and significant same-direction or opposite moves.
Usage
Monitor Z-Score to identify when the equity–rates linkage is stretched beyond typical bounds. I typically use this on the H1 or H4 timeframe.
Watch for correlation regime shifts to spot changing market dynamics. Typically price falling into support or moving into resistance as there is a false correlation or a flip.
Same-direction dots help flag unusual synchronized moves between risk assets and yields - these are especially useful for identifying false moves.
