10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – October 20, 2014 Forecast

December 10-Year U.S. Treasury Notes finished lower on Friday, inside the up channel, but in a positon to take out the line supporting the channel at 127’18. The upper level of the channel is at 128’24 today.

The main range is 123’16 to 130’17. The retracement zone formed by this range at 127’00.5 to 126’06 is the next likely downside target should the support fail. Since the main trend is up on the daily chart, buyers are likely to show up following a test of this zone so be prepared for a technical bounce.

If the momentum is strong enough to take out the Fibonacci level of the retracement zone then look for the break to continue into a pair of uptrending angles at 126’06 and 126’04.

Taking out the upper end of the channel at 128’04 will be a sign of short-covering. This will most likely be triggered by more weakness in the stock market.

The tone of the market today will be determined by trader reaction to the lower support of the channel at 127’18.

Since it looks like the stock indices have turned the corner and heading higher, today’s action starts with a slight downside bias.