Treasury Yield May Meet Resistance at 2.4%: Technical Analysis

Treasury 10-year note yields may stay below 2.4 percent after having completed a two-month climb, Sumitomo Mitsui Banking Corp. said, citing trading patterns.

The level is the peak of a so-called double top formed in October 2011 and March 2012 and may meet resistance, said Daisuke Uno, chief strategist in Tokyo at a unit of Sumitomo Mitsui, Japan’s second-largest bank by market value. Yields rose to 2.06 percent on Feb. 4, the most since April 2012, advancing from a a record low of 1.38 percent marked on July 25 last year.

“Ten-year rates climbed above 2 percent last week, but the strong resistance around 2.4 percent will cap a further rise,” Uno said. “I expect yields to move between 1.6 and 2.1 percent in the short term.”

Benchmark 10-year note yields were unchanged at 1.98 percent as of 9:18 a.m. in Tokyo, according to Bloomberg Bond Trader prices. The 1.625 percent note due in November 2022 was at 96 7/8. Yields climbed 37 basis points over the past two months. A basis point is 0.01 percentage point.

In technical analysis, investors and analysts study charts of trading patterns to forecast changes in a security, commodity, currency or index. So-called resistance is where orders to trade bonds may be clustered.

The double-top reversal is a pattern typically found on bar charts, line charts and candlestick graphs. The formation is made up of two consecutive peaks that are roughly equal, with a moderate trough in-between.

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