A week-long rally in Treasuries is set to pause after yields declined to a level that may deter investors, according to Shin Kong Life Insurance Co., citing trading patterns.
A graph of the 10-year rate from the beginning of May through last week forms a W-shaped pattern, said Will Tseng, who studies technical levels of Treasuries at Taipei-based Shin Kong, which has the equivalent of $52.8 billion in assets.
The average yield in the middle of the formation is 1.62 percent and is a technical barrier that will weaken demand, he said. Ten-year rates have fallen to 1.63 percent as of 6:32 a.m. in London from as high as 1.86 percent on Aug. 21.
“If yields close within two-to-three basis points of the technical level for the next few days, then we can say that the bullish momentum is pausing,” Tseng said. “Yields may rise again.”
In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a security, commodity, currency or index.
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