Sunday, December 6, 2009

10-Year US Treasury Price & Yield - Possible setting for reversal

The NFP data on Friday caused a sharp turnaround in 10-Year UST's price and yield right at the 50-Week MA levels. The positive media signals about the exit from the recession seems to converge right now with the sharp upsurge in 10-year yiled to 3.48 however as seen on the chart it is still caught in the 3.25 - 3.66 range. My take is we have seen a solid support which survived a second test this week at 3.22 and yield is going to challenge 3.66-70 levels where I'd expect to see some struggle at the consolidation channel top.

The Weekly candle shaped as a huge White Marubozu which is also a Bullish Engulfing pattern, closing the gap from 2 weeks ago. The whole structure of this consolidation might well be called a Bullish Flag that implies, if broken to the upside around 3.73, a continuation with first target - the 200-Week MA at 4.09.

The 10-Year note's price in he same time has he same technical workings in the moment as it bounced off the Resistance trendline at 121.17 and closed the gap from the 2 weeks before. I'm looking for continuation of this move down below 118 where the longer term trendline from the Dec '08 Highs and the Support Trendline converge around 117.

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