Chartology: "Interest Rates May Tumble"

Our third post on the topic in recent days.
From Barron's Getting Technical column:

Fed tapering was supposed to raise rates. That isn't happening. Amid a flight to safety from junk, rates are on the verge of dropping sharply. 

Investors, pay heed. Technical analysis suggests that interest rates are on the verge of falling significantly.
The most important pattern right now is the potential double top nearing completion in the chart of 30-year Treasury rates (see Chart 1). The pattern marks two failed rallies at about the same level and looks similar to the letter "M." When the market moves below the center low of the "M," the pattern completes and the forecast will be for further losses.

Chart 1 30-Year Treasury Yield, Short Term

That center low is 3.56% and the top of the pattern is 3.98% (both levels rounded to two decimal places). Wednesday, the yield was roughly 3.64%.

If this support level breaks, a move down to 3.14% would be indicated by the size of the pattern itself. That would be more than a 50% retracement of the yield gain from last summer through the end of the 2013.

It sounds unlikely, given that the biggest buyer of bonds—the Federal Reserve—started to cut back on its purchases via the taper. Less demand means lower bond prices and higher interest rates. Yet, lower rates are what would happen if the double-top pattern breaks down.

Let's put this into perspective in the big picture. A monthly chart shows a strong trendline drawn from the 7.91% interest rate peak at the end of the yield bull market and bond price bear market in 1994 (see Chart 2). The trendline can be finessed all the way back to the ultimate yield peak and price low in 1981, though that is not important for this discussion....

...On the charts, the 10-year yield exhibits the same double-top pattern as its longer-term cousin, but it is not quite as far along in development (see Chart 3). And if we move to shorter maturities, which are increasingly influenced by the Fed's zero-interest-rate policy, the more distorted the pattern becomes. The two-year yield sports a choppy trading range barely above its financial crisis lows.

Chart 3
10-Year Treasury Yield

MORE

Recently:
Chartology: Citi on the 10-year Yield
"Interest Rates Are Still Heading Lower"
Chartology: Yields Lower, Then Higher (in line With DoubleLine's Jeff Gundlach)