It's no secret that bonds have rallied impressively in March.  The bigger and faster a rally is, the more we may worry about the risk of a bounce.  To be sure, bounces will happen.  They can be healthy byproducts of a big move or they can be an alarming warning sign for more potential weakness.

Certainly, we can look at any given bounce in conjunction with its underlying motivations in trying to determine what sort of movement we should worry about.  For instance, if rates are surging higher after a much stronger jobs report next Friday, that's the kind of "underlying motivation" that matters.

But what if such motivations are in short supply and we're still observing movement?  In those cases, technical analysis is useful--simple stuff like pivot points and trend channels as seen in the chart below.  With 10yr yields starting the day well under 2.40%, that would be our first meaningful ceiling.  It also happens to coincide with the top of this week's rally trend channel.

Simply put, a break above 2.40% would raise the level of concern about a broader bounce.  In order to confirm such a bounce, we'd need to see 2.43 and especially 2.47%.  Remember, the big-picture floor for 2019 had been 2.55%.  When we moved below that, it was in grand fashion.  Such breakouts often see yields return to the scene to validate their decision.  Simply put, there is a scenario where bonds continue lower in yield in 2019, but only after moving back up toward 2.55% temporarily (there's also a scenario where yields break back above 2.55%, but we'll talk about that if it starts to look like more of a possibility).