U.S. bonds to hang?

Price action in the bond is interesting following the auction of $13 billion at 3.369%. The candlestick for today’s session is showing a possible bearish ‘shooting star’ in development.

The September ’14 contract would need to settle 137-03 or lower to form this pattern. Yesterday’s candle may be confirmed as a bearish ‘hanging man’ if prices move still lower today.

 


Bonds have found resistance here before. In late June, a brief advance stalled with a ‘shooting star doji’ on June 26th, leaving the session and a 3 week high at 137-12. Within 4 sessions, the contract fell 3 points to 134-11. Additionally, a ‘bearish harami’ formed in late-May at 138 and within 5 sessions, U.S. Treasuries retreated about 4.5 points. Therefore a seller here might look for 3-5 points on a short, risking a settle today above 137-03.

About the Author

Martin McGuire, managing director at TJM Institutional Services

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