10-Yr U.S. Treasury Notes (TY) Futures Technical Analysis – October 9, 2014 Forecast

December 10-Year U.S. Treasury Notes spiked to the upside on Wednesday after the minutes from the Fed’s September meeting revealed a softer tone than expected by the central bank.

Based on the higher close and the momentum created by the minutes, traders may take a shot at the steep angle at 127’00 today. Crossing to the bullish side of this angle will put the market in an extremely strong position with the May 13 top at 127’13 the next likely major upside target.

On the downside, the nearest support is a steep uptrending angle from the 124’26 minor bottom at 125’26. The market is actually trading inside of a channel created the two uptrending channels.

If 125’26 fails as support then look for an acceleration into a pair of uptrending angles at 125’10 and 125’08.

T-Notes can become very volatile over the near-term. There may even be a wicked two-sided trade. This is because yesterday’s spike to the upside was triggered by the Fed event and the rally earlier in the week was fueled by the sell-off in the stock market.

Traders who took long protection when stocks were selling off may want to exit, driving prices lower if stocks continue to rally. This is because the reason for the long hedge has gone away.

Those who believe the Fed has turned soft on hiking interest rates may want to go long. This is going to trigger volatility until one side wins over the other.

The battle between investors and traders should prove to be interesting and difficult to follow if the order flow doesn’t show a clear winner. Be careful trading T-Notes until the fundamentals become clearer. At the least, be prepared for a choppy, two-sided trade.