MBS Live Day Ahead: Bonds Trying to Break Resistance With Help From Data

Today begins with weaker economic data helping bonds move into stronger territory.  Investors had been eagerly awaiting the Retail Sales and CPI data duo as the last key market mover of the week.  Back on June 14th, the same two reports combined for an even bigger market reaction than the Fed Announcement.  While they didn't fall quite as far from median forecasts this time around, they've nonetheless gotten things moving to start the day.

10yr yields are consequently pushing up against the 2.30% technical level that's been in varying degrees of focus all year (first as a floor, then as a ceiling, and most recently, as a floor again).  If bonds are able to hold these gains, it would send a moderately strong technical signal about additional rally potential (the rightmost candlestick in the chart below is today's trading so far).  If bonds are able to improve upon these gains, it would send an unequivocally strong signal.  

So what would "improving upon these gains" look like?  Where's the magical line in the sand between a moderate signal and a strong one?  That's a bit of a moving target, but something in the neighborhood of 2.28% would be the threshold of that "strong signal" territory.