Treasury market report for the week of June 20

June 19, 2016 11:04 PM

30-year Treasury bond

Last week 30-year Treasury bond futures successfully tested and surpassed its all-time contract high (see last Monday’s report).

Although I was looking for a correction after Monday’s trade as the Treasury market was registering overbought momentum indicators,  the long bond posted a new all-time high as USU traded in a below average 3-02-point weekly range and settled up 26-ticks on the week and down. Bonds finished the week establishing an interesting reversal top. Thursday USU gap opened higher and posted a new contract high before reversing to settle below its daily midpoint. On Friday bonds gap opened lower and drifted southward to complete an island top reversal. 

My read is for early weakness this week although all three trends are firmly entrenched in a bullish outlook.  For conservative traders, as long as USU remains below 170-06, look for limited gains as USU should consolidate lower.  Until the long bond breaks 170-06 USU should trade between either 167-00 or 165-26/20 to 170-06 or 170-28. 

Today USU should trade between at least 168-22 or 168-11 or 168-05 and 169-22 or 170-00.

Support:  168-22, 168-11, 168-05, 167-26, 167-00, 166-25, 166-19, 165-20/19, 165-04, 164-02, 163-27, 163-14, 162-30, 162-15, 162-01/00 and 161-24/23. 

Resistance: 169-22, 170-00, 170-06, 170-26/28, 171-02 and 171-07.

 

10-year Treasury note

Early last week the 10-year Treasury note posted its second consecutive settlement above 131-16, thus targeting a move to 133-00/02 and possibly 135-29.  The note traded in a below average 1-04+-point weekly range and settled up 10+-ticks on the week and down 13+-ticks on the session at 131-27+. 

Although all three trends are bullish and target higher prices the Treasury market faded at the end of the week.  The note finished the week posting a new contract high after gap opening higher Thursday and relinquished a good portion of its gains to settle below its daily midpoint. A gap open lower on Friday signaled a possibly island top reversal pattern.  My read is for early weakness although all three trends a bullish.  For conservative traders as long as TYU remains below 132-09, look for limited gains as TYU should consolidate lower. For the week the TYU should trade between 131-17 possibly 131-03/130-31 and 132-09 or 132-22/25.

 If the upper level is broken there is little resistance until 133-00/02. Today TYU should trade between 131-24 or 131-18/17 to 132-04/06 possibly 132-09.

Support:  131-24, 131-17/16, 131-08, 131-03, 130-31, 130-25+, 130-20, 130-11, 130-02/00, 129-22, 129-11, 129-07/05, 128-28, 128-24, 128-18, 128-14 and 128-01/127-31. 

 Resistance: 132-04/06, 132-09, 131-22, 132-25+, 133-01 and 133-25.

 

About the Author

Steven G. Orfanos is a Treasury market technician with more than 30 years of experience from the floor covering Treasury futures and the founder of Orftech. He produces daily reports on the Treasury complex, which include market analysis and technical support & resistance levels.  You can view past reports and learn more about Orftech at www.orftech.com