Technical Update - US, UK & German Bund 10-year yields plus US 30-year

Technical Update - US, UK & German Bund 10-year yields plus US 30-year

Bonds 4 minutes to read
KCL
Kim Cramer Larsson

Technical Analyst, Saxo Bank

Summary:  US 10-year and 30-year Treasury yields in uptrends eyeing even higher levels
Is UK 10-year Gilt yields moving higher or forming a reversal pattern?
10-year Bund yields forming a rising channel. Strong resistance at 2.75


US 10-year Treasury yields have broken above resistance at around 4.09. If closing above the road is paved to October 2022 peak and 1.618 projection of the latest correction at around 4.30.

There is some resistance at around 4.22 which is also the 1.382 projection.
RSI is showing positive sentiment without divergence indicating higher levels are highly likely.   

Source: Saxo Group

30-year Treasury yields uptrend is close to be testing 2022 peak at around 4.38.
RSI is positive and with no divergence indicating likely higher yields.  A move to the 1.382 projection at around 4.75 could be seen. The 4.75 level is also around the level where yields where rejected 4 times between 2008 and 2011. A strong resistance level.

The RSI indicator: Historically, every time RSI has reached the 80 level (dashed blue line) a correction has hit yields. That scenario could play out again if yields are reaching the 4.75 level.
To demolish this bullish scenario a daily close below 3.80 is needed.

Source: Bloomberg

UK 10-year Gilt yields correction has bounced just above the key support at around 4.10. The correction came after RSI divergence on the uptrend from May through July.

Uptrend seems to have resumed but an RSI close above 60 threshold is needed to confirm that.
If the 10-year Gilt yields close above the 0.618 retracement at around 4.50 that scenario is likely to play out. And if it does a move to the 1.382 projection at around 4.93 could be seen.

However, if closing below 4.10 10-year Gilt yields could have formed a Shoulder-Head-Shoulder reversal pattern and a move down to 3.70-3.60 is likely

Source: Bloomberg

10-year Bund yields are forming a rising channel supported by bullish RSI i.e., pointing to higher levels. A move to test the upper rising trend line ant the strong resistance at around 2.75 seems likely.
To reverse the bullish trend a close below 2.30 is needed .

Source: Bloomberg

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