As The 10 Year Selloff Accelerates, "All Eyes On The 2.27%/2.32% Support Zone"

For the chartists out there (and these days that would mean pretty much all momentum-igniting algos who are the only ones left trading these here "markets") the following note from SocGen explaining why if/when the 10Y selloff rises above 2.32% it may be a time to panic (and vice versa) is quite relevant now that the 10Y is just a few basis points away.

10Y UST: all eyes on the 2.27%/2.32% support zone

 

The 10Y UST has been forming a possible reversal pattern (Head and Shoulders) since last October and approached the confirmation level at 2.27%/2.32%. 2.27%/2.32% also coincides with the main channel support in force since late 2013 hence highlights this support zone is pivotal. Daily indicators are near multi-month floor hence they render it difficult to state whether this pattern will be confirmed. However, in the instance of 2.27%2.32% is breached, the sell-off would extend further, probably at a fast pace, towards 2.40% and 2.47% next. Near term, as hourly momentum indicators are also near a multi-month floor and positively diverging from prices a short-term pullback is set to happen to 2.15%/2.14%. A break above will mean a deeper retracement to 2.10%/2.08% and possibly even 2.02%/2.00%.

 

And this is where the 10Y is now: