10-year T-Note yield has descended within a 17-year bear channel since November 1994. The yield posted a fresh low at 1.974% (18 August 2011) below the 2.034% prior reaction low (18 December 2008) before consolidation took hold. Near term, a break above 2.360% (Resistance 1) would extend the consolidative strength towards 2.438% (Resistance 2), near 38.2% retracement of 3.223% (01 July 2011)/1.974%, then 2.589% (Resistance 3) near 50% retracement. However, as the monthly trend studies remain bearish, there is scope for the current corrective bounce to form a swing high under the significant resistance zone at 2.756% (near 61.8% retracement)/2.814% (Resistance 4)/(Resistance 5) ahead of a reversal to the downside. A break below 2.113% (Support 1) would resume bears to reopen 1.974% (Support 2). Only a sustained breakdown there would initiate the next down-leg towards the Fibonacci projection at 1.734% (0.618x 5.333%/2.034% from 3.770%) (Support 4) which guards the next Fibonacci target at 1.250% (0.764x 5.333%/2.034% from 3.770%) (Support 5).
Trading Indication:
Short-term (Intraday): Possibly buy lower
Long-term: Possibly sell higher
Trading Indication:
Short-term (Intraday): Possibly buy lower
Long-term: Possibly sell higher
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