10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – October 8, 2014 Forecast

December 10-Year U.S. Treasury Notes surged through the last resistance angle before the August 15 top at 126’12. If the upside momentum continues today then look for a breakout through this level.

The technical picture looks bullish but traders have to remember that the market is being driven by a news event, which is the sell-off in the stock market. This means that despite the strong rally and near breakout, T-Note traders are taking their cues from the equities. If stocks continue to sell-off in a volatile matter then look for the rally to continue. If stocks stabilize and rally then watch for a retracement to the downside.

If the upside momentum continues then look for a test of the steep uptrending angle at 126’24. Crossing to the bullish side of this angle could trigger an even further rally into the May 1, 2013 top at 127’13.

A failure to take out 126’12 with conviction, or a failed breakout over this price will be a sign of selling pressure. The next sign will be a break under the downtrending angle at 125’25.5 today. This could trigger an even steeper break into a possible support cluster at 125’07 to 125’04.

Look for a possible bullish tone if 126’12 is taken out with conviction or a possible sell-off if T-Notes break below 125’25.5.