September U.S. Treasury bond futures at the Chicago Board of Trade on Wednesday tagged a fresh four-month high of 108 21/32, but then backed off the session high and were trading nearer the session low in morning dealings. Still, the bond market bulls have gained near-term technical momentum recently. Prices have been trending higher for five weeks, from the late-June low of 105 12/32. Price action Wednesday will be extra important for the bond market, from a near-term technical perspective.
A high-range close Wednesday would suggest that prices can continue to trend higher in the coming days, or longer, and odds would increase that a major market low is in place. However, a low-range close in September U.S. Treasury bonds Wednesday would be an indication that the bulls have become tired at the higher price levels, and that the price trend is likely to turn sideways or even lower in the near term. The 14-period slow stochastics indicator is presently suggesting that September T-Bond prices are overdone on the upside and due for at least a near-term corrective pullback.
click on the chart to enlarge
Both the %D and %K lines of the slow stochastics indicator are at levels above 80.00, to suggest an overbought market. Technical resistance for September T-Bonds is located at Wednesday’s high of 108 21/32, and then at 109 even. Support is seen at Tuesday’s low of 107 29/32 and then at 107 16/32. A close below solid chart support at 107 even in September T-Bonds would deflate the bulls and suggest that a near-term top is in place.
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