September U.S. Treasury Bond futures prices late last week took a nosedive and on Friday hit a fresh 11-month low. However, prices on Friday did rebound well off the session low to close near the session high. Friday’s price action could have produced a classic selling “exhaustion tail” on the daily bar chart, whereby prices hit a fresh for-the-move low and then selling interest dries up at lower price levels as the bears become exhausted.
However, the bulls will have to show some more power Monday or Tuesday to confirm the selling exhaustion tail and to suggest that a near-term market low is in place. The bears were pressing their case in morning dealings Monday, as prices hovered near the session low. And at present, the bond market the bears still have the solid near-term technical advantage. Bears’ next downside price objective is closing prices below solid chart support at Friday’s low of 105 10/32. The next upside price objective for the bulls is closing prices above solid technical resistance at 107 even. First resistance is seen at Monday’s high of 106 25/32 and then at 107 even. First support is seen at 106 even and then at 105 16/32.
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