Friday, May 1, 2015

Treasuries Have (Candlestick predicted) Tough Week

Treasury yields jumped this week with 10 year yields rising 20 basis points from 1.91 settle last Friday.  The technical backdrop for Treasuries has deteriorated and there appears to be room for further weakness over the coming week(s).    

A week ago Wednesday I shared a note on TYM5 (‘TenYear Treasuries - Another Go, This Time with a Head and Shoulders’) that suggested a bearish ‘head and shoulders’ (for fellow Candlestick enthusiasts, we call this a ‘Three Buddha’) in the making.  The neckline proved to be powerful support and TYM bounced from the Wednesday/Thursday test of the neck line to 129-18+ on Monday – nearly 1 point higher. 

Since then, Treasuries have sold off and depending on how you draw; the neck line was broken on Tuesday or Wednesday.   The objective of the bearish reverse, in Western style analysis, would be roughly 127-07.  

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