Breaking News

Tweet TWEET

Triangular Consolidation Bullish for Bonds: Technical Analysis

A so-called triangular consolidation trading pattern on 10-year Treasury note futures suggests a bullish breakout for the contract that would equal the high reached in July, according to Bank of America Corp.

“While bearish momentum divergences should be a concern for longer term bulls, the increasingly triangular consolidation points to a bullish break,” MacNeil Curry, chief rates and currencies technical strategist at Bank of America Merrill Lynch in New York, wrote today in a client note.

The December 10-year futures contract touched a high of 134 18/32 on July 25. It climbed today to 134 5/32. The note is “carving out a four-day symmetrical triangle, which points to a push” to the higher level, Curry wrote.

“From a 10-year cash perspective, this targets the pivotal 1.554 percent - 1.54 percent zone,” Curry wrote, adding “into here we would be on the lookout for greater signs of stalling.”

A break of 1.667 percent or a price of 133 11/32 would confirm a bearish turn in trend, he added.

Curry did not immediately return calls seeking comment.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index.

To contact the reporter on this story: Susanne Walker in New York at swalker33@bloomberg.net

To contact the editor responsible for this story: Dave Liedtka at dliedtka@bloomberg.net

Press spacebar to pause and continue. Press esc to stop.

Bloomberg reserves the right to remove comments but is under no obligation to do so, or to explain individual moderation decisions.

Please enable JavaScript to view the comments powered by Disqus.