From the July 01, 2011 issue of Futures Magazine • Subscribe!

Tech Talk: Bonds approach critical midpoint

The 30-year U.S. Treasury bond contract has had an impressive rally since April due to flagging economic numbers and is approaching an important pivot area. The 126-24 area represents the midway point between the December 2008 high and the June 2009 low on the long bond.

You can see in "Halfway point" that bonds are nearing this point, which was a congestion area in the first few months of 2009 before they took another leg down.

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Bulls will try and take this level out and bears will try and defend it. If the bulls win, look for bonds to rally to 129-16. If the 129-16 level is taken out, the long bond could challenge the August 2010 high. If the bears prevail, there should be support at the 32.8% retracement from the aforementioned move all the way down to 122-05. The 122-05 support area is critical as it was a strong resistance area for the first four months of 2011.

Jack Broz trades from the CBOT floor and provides analysis on the bond market at TradeBondFutures.com.

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