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U.S. 10-YEAR TREASURY YIELD BACK UP TO CHALLENGE HIGHS (0900 EDT/1300 GMT)

On Wednesday of this week, the U.S. 10-Year Treasury yield US10YT=RR hit 4.3520%, putting it just shy of its August 22 high at 4.3660%.

Despite backing away into a 4.2210% low on Thursday, in the wake of hotter-then-expected economic data, the yield finds itself around 4.33% on Friday as it once again challenges what was its highest level since November 2007 just days before the highly anticipated September 19-20 FOMC meeting:

The week in August, when the yield hit 4.3660%, also marked the end of a six-week winning streak. Of , since bottoming in March 2020, and prior to the most recent push, there were four weekly winning streaks of six weeks or more.

Once these streaks ended, the yield was at, or , a significant high, ultimately leading to a multi-week pullback.

The yield did slide to 4.06% during the week ending September 1 before it quickly reversed back to the upside. However, the end of the recent weekly win streak may still portend a more extensive pullback.

Additionally, of , at 71.5, the weekly relative strength index (RSI) is still shy of its August-25 close of 72.018, despite the yield being on track for its highest weekly close since late-October 2007.

The RSI also faces a resistance line from its early-2021 high which comes in around 81.5.

Lagging momentum both short and longer-term suggests the yield may be vulnerable to a reversal.

In terms of levels above 4.3660%, the yield faces weekly Gann Line resistance which resides at about 4.41%, and ascends to around 4.415% week. Gann Lines are trend lines running at certain angles off significant highs and lows.

When the yield's 12-week win streak was ending in October 2022, it managed just one marginal close above this line. The yield reversed the week to end the streak just as a sharp multi-week decline was kicking off.

In the event of further runaway gains, there is a wave equality projection around 4.71% (Elliott Wave basis). Additional resistance is in the 5.06%-5.15% area.

A reversal below 3.9765%, or the 23.6% Fibonacci retracement of the 1981-2020 decline, may see the yield refocus on its 3.2530% April 2023 low.

(Terence Gabriel)

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(Terence Gabriel is a Reuters market analyst. The views expressed are his own)