December U.S. Treasury bond futures at the Chicago Board of Trade late last week poked to a fresh four-week low of 110 7/32, but have since seen a rebound as bulls are regaining upside technical momentum. Shorter-term oscillators (slow stochastics and Relative Strength Index) are showing bullish readings Tuesday morning. Importantly, last week’s low of 110 7 /32 is a key Fibonacci price level, making it strong technical support.
click on the chart to enlarge
That price is a 38.2% retracement of the price move from the June low of 108 18/32 to the September high of 113 11/32. For the bulls to regain better near-term technical momentum to suggest a retest of the September high, they will have to push and close December T-Bonds above solid chart resistance at 112 even.
If the T-Bond bears can push December futures below solid technical support at last week’s low of 110 7/32, then that would open the technical door to a solid leg down in prices and would also suggest a near-term market top is in place in bonds.
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Stay tuned! Jim Wyckoff