10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – August 28, 2015 Forecast

December 10-Year U.S. Treasury Notes rebounded nicely from an early session sell-off on Thursday, but still managed to close slightly lower. The catalyst behind the selling pressure was the strong recovery in the U.S. equity markets. The main trend is up according to the daily swing chart, however, momentum has shifted to the downside since the People’s Bank of China initiated stimulus measures early last week, stopping the slide in global equity markets.

The main range is 124’00 to 129’10.5. Its 50% level at 126’21.5 is the primary downside target. This level combines with a long-term uptrending angle to form a potential support cluster at 126’14 to 126’21.5. Watch for a technical bounce on the first test of this area, but be prepared for an acceleration to the downside if this area fails to stop the selling.

The first minor target under 126’21.5 is the main bottom at 126’16. A trade through this level will turn the main trend to down. This could trigger a further break into the Fibonacci level at 126’01.

The first upside target is a steep downtrending angle at 127’10.5. Taking out this level will signal the presence of buyers. This could trigger a further rally into the next angle at 128’10.5.

Based on the close at 127’11.5, the direction of the market today is likely to be determined by trader reaction to the downtrending angle at 127’10.5 Look for a bullish tone to develop on a sustained move over 127’10.5. Watch for increased selling pressure on a sustained move under 127’10.5.