Treasury Futures May Fall to Six-Month Low: Technical Analysis

U.S. 10-year Treasury futures are poised to decline to the lowest level in six months after failing to climb above a key level of so-called resistance, according to Credit Suisse AG said, citing trading patterns.

A “significant” hurdle is seen at 133 5/32 which represents a 38.2 percent Fibonacci retracement of the slide from the record-high 135 1/2 reached July 25 and the Oct. 25 low at 131 22/32, the bank said in an emailed report today. The contract will find support at 132 1/2, it said.

“We look for this to provide a ceiling, and to see a fresh turn lower from here,” wrote Credit Suisse analysts including London-based David Sneddon, head of technical analysis research.

The Treasury 10-year note contract expiring in December fell 0.1 percent to 132 20/32 as of 2:01 p.m. London time, after rising to 133 2/32, the highest level since Oct. 16.

A break below 132 1/2 may target a move toward 131 19/32, the analysts wrote. That’s the April 26 low, according to data compiled by Bloomberg.

Resistance refers to an area on a graph where analysts expect sell orders may be grouped. Support is an area where buy orders may be clustered. Fibonacci analysis is based on the theory that prices rise or fall by certain percentages after reaching a new high or low.

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

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