10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – August 12, 2015 Forecast

A second devaluation of the Yuan by the People’s Bank of China sent September 10-Year U.S. Treasury Notes soaring during the pre-market session. The momentum created by the rally suggests the move may continue during the regular session especially if the U.S. stock market continues to sell-off.

The pre-market rally was triggered when buyers took out the previous main top at 127’29.5 with conviction. The first support angle comes in at 128’02. The next support is the previous main top at 127’29.5. A trade below this level will indicate that the last rally was triggered by buy stops rather than aggressive buying. A third support point is a steep uptrending angle at 127’25.5.

A break under 127’25.5 is likely to trigger a further decline into the major Fibonacci level at 127’20.5. This is followed by the uptrending angle that has been guiding the market higher since August 5. This angle comes in at 127’05.5.

The first upside target today is the April 27 top at 129’05. If the upside momentum is strong enough to take out this level then look for the rally to extend into the April 17 top at 126’16.5 then the April 3 top at 129’19.

The strong pre-market rally gives T-Notes an early upside bias. The direction of the market today will be determined by the move in the equity markets. If the U.S. stock markets sell off sharply then look for the rally to extend. If stocks make a recovery then T-Notes may break on profit-taking.