Continued weakness in the US Dollar along side of upwards spiraling commodity prices are likely to put further pressure on the interest rate complex, with the benchmark 30-Year US Treasury bonds already showing signs of weakness. Tuesday's trading session brought on a technical breakout of a Triangle chart pattern on the hourly time frame.
This Triangle has been forming over the course of the long sideways consolidation in bond prices seen since the start of the month. This price action has been testing key long term support resting at 120.00 in the T-bond futures, and the break below this support may be the first push towards a new, lower price range (indicating rising interest rates as a result).
Currently the market is trading back inside of the Triangle, a pattern often seen after a soft initial breakout. A continuation below the swing low at 119.50 will confirm the breakout. This would pave the way for a move towards the projected downside price range, forecast at a level between 119.00 and 118.00 in the Bond futures. This would represent a significant failure of the 120.00 price support, possibly culminating in a longer term bear market for Bonds.
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