Technicals on Tens
By Rom Badilla, CFA
July 9, 2012
In our last “Technicals on Tens” post, we stated that a convincing break of the 1.55-1.56% range which is the bottom end of the recent sideways symmetrical triangle that has plagued the market with indecisiveness between buyers and sellers, should lead to a continuation of the overall intermediate downward trend. With the yield of the 10-Year at 1.51% according to Trade Monster’s Bond Trading Center coupled with the MACD indicator crossing and turning negative (lower section of chart), we may see a retest of the all-time lows of 1.44%.
Keep in mind that the lower end of the Bollinger Band looms at 1.49-1.50% range which may keep the retest short-lived.
However when looking at a longer-term chart, resistance lies in the 1.36-1.37% range given the trend-line established from the lows set in June 2003 and in the December 2008.
A short-term reversal would be marked by a move past the top of the aforementioned intermediate downward March and April trend channel at around 1.66-1.67% range. The next layer of support lies at 1.80% which is the May 22high. Beyond that, the high set on May 10 of 1.92% percent would provide another layer of support. Afterwards, the market should find intermediate support in the declining 200-Day moving average which is around the 1.94% area. Farther out, medium support lingers at 2.12 to 2.17% range which is the April 6 payroll gap down open. Any flight to quality reversal due to European solution or improving U.S. economic data could lead the 10-Year to challenge recent highs of 2.39% which was set in late March 2012.
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