The yield of the 10-Year Treasury note climbed from 4.73% in March to 5.32% in June, at which point it had surged to a six-year resistance line, implying the potential for much higher rates. It then reversed in a big way and plunged to 4.74% into today's low, mostly in response to flight-to-safety concerns.

Apart from what might drive the yield still lower, a look at the big picture technical situation shows that the declining yield structure is nearing a confrontation with a 4-year support area (4.75% to 4.62%) that might be just as difficult to break and sustain as was the failed upside yield breakout in June -- above a 6-year resistance line!

Where does that leave us? Betwixt and between what are eventually converging major trendlines. Whichever side is violated and sustained (5.32% and 4.62%) will determine the intermediate-term directional move in long-term rates.

What is my suspicion? Yield will break the lower major support area (4.75% to 4.62%) for a plunge towards a retest of the 2003 lows near 3%.

By Mike Paulenoff

Mike Paulenoff is author of the MPTrader.com (www.mptrader.com) , a real-time diary of Mike Paulenoff's trading ideas and technical chart analysis of Exchange Traded Funds (ETFs) that track equity indices, metals, energy commodities, currencies, Treasuries, and other markets. It is for traders with a 3-30 day time horizon, who use the service for guidance on both specific trades as well as general market direction

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