Thursday, July 10, 2014

U.S. Bonds Right on the Edge

Price action in the Bond is interesting following the auction of $13b at 3.369%.  The candlestick for today’s session is showing a possible bearish ‘shooting star’ in development.  The September ’14 (USU4) contract would need to settle 137-03 or lower to form this pattern.  Yesterday’s candle may be confirmed as a bearish ‘hanging man’ if prices move still lower today. 

Bonds have found resistance here before.  In late June, a brief advance stalled with a ‘shooting star doji’ on June 26th, leaving the session and a 3 week high at 137-12.  Within 4 sessions, the contract fell 3 points to 134-11.  Additionally, a ‘bearish harami’ formed in late-May at 138 and within 5 sessions, USU retreated about 4.5 points.  Therefore a seller here might look for 3-5 points on a short, risking a settle today above 137-03.  

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