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Technical Update - US 10-year Treasury yields back above 4%, will it continue. EuroBund future reversed uptrend

Bonds 3 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  US 10-year Treasury future uptrend seems to be reversing sending yields above 4%. If 4.10 is taken out there is room to 4.25
EuroBund future has reversed it uptrend testing key support area


US 10-year Treasury yields are bouncing somewhat from just above strong support at around 3.72

Breaking bullish out of its falling channel pattern yields are currently testing the 200 DMA and resistance at around 4.05.
A daily close above 4.05 could lead to further upside. Minor resistance at 4.10 which is also the 0.618 retracement of the last leg down, and strong resistance at 4.29 just above the 0.382 retracement of the entire downtrend since October at 4.25.

The 55 DMA has crossed over the 100 DMA when they are both declining forming a Death Cross. However, most of the down trend has probably occurred when the Death Cross is being formed.

The two Moving Averages do however, act as fairly strong overhead resistance limiting the uptrend at least on short-term

If rejected at 4.05 and in stead is sliding back below 3.78 downtrend is resuming

us10tyields d 0501
Source all charts and data: Saxo Group

The US 10-year Treasury future was rejected at key strong resistance at around 113 8/32 now broken below its lower rising trend closing in on key support at 111 12/32

A close below 111 12/32 could lead to a sell-off down to around 109 10/32 level.

However, RSI is still in positive sentiment with no divergence indicating what we are witnessing could just be a correction. To resume uptrend a close above 113 12/32 is needed 

us10yfut d 0501

EuroBund future has reversed its bullish trend currently testing upper part of support area at 135.45-134.55. A break below 135.45 and the lower part of the support area at 124.55 is likely to be tested.
If that scenario plays out there could be further downside in store for the Bund future.

If closing below 134.55 further selling pressure down toa round 133.15-132.75 could be seen

For the Bund future to resume uptrend at close above 137.84 is needed
bund d 0501

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