10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – August 5, 2015 Forecast

September 10-Year U.S. Treasury Notes sold off on Tuesday after Dennis Lockhart, President of the Federal Reserve of Atlanta, suggested that Fed policy makers are prepared to raise the Fed funds rate in September.

Lockhart is quoted in the Wall Street Journal as saying it would take “a significant deterioration in the economic picture” to persuade the Fed not to raise rates at its September meeting.

Yesterday’s lower close also placed the T-Notes inside a major retracement zone, suggesting a possible end to the recent three-week rally.

Based on the close at 127’08.5, new resistance is an uptrending angle at 127’14, a Fibonacci level at 127’20.5 and the minor top at 127’29.5.

On the downside, the first target is a major 50% level at 127’01. This is followed by a short-term 50% level at 126’20, an uptrending angle at 126’12, a main bottom at 126’11 and a short-term Fibonacci level at 126’10.

The potential support cluster at 126’12 to 126’10 is most significant because a trade through 126’11 will turn the main trend to down on the daily swing chart.

Taking out the Fib level at 126’10 with conviction could trigger an acceleration to the downside with the next target coming in at 125’27. This is followed by another angle at 125’18.5. This is the last potential support before the 125’10 main bottom.