Yields can’t go any higher (yet): BofA technician

It's been quite the run for rates. The 10-year yield has nearly doubled since the beginning of May, and it recently touched 3 percent for the first time in over two years. But according to one top technician, the spike is over—at least in the short term.

MacNeil Curry, head of global technical strategy at Bank of America Merrill Lynch, does think that yields will eventually rise much higher. In fact, on the Aug. 15 edition of "Futures Now," he made the prescient prediction that the 10-year yield was headed to 3 percent. But after that called played out perfectly, Curry has switched.

"We're stuck in a 3 percent to 2.7 percent range" on the 10-year yield, Curry said on Tuesday's "Futures Now."

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After all, he noted that sentiment has gotten remarkably one-sided. Investors have gotten unabashedly bearish on bonds, which move inversely to yields.

"If you look at a whole host of external sentiment providers, by pretty much every metric, we're at bearish extremes which historically lead to a pause, if not a reversal," he said.

Curry sees the same thing when he simply looks at the chart. After all, one needn't be a technical genius to appreciate that the bond market has moved very far, very fast.

Traders work in the ten-year U.S. Treasury Note options pit at the Chicago Board of Trade in Chicago, Illinois, U.S.
Daniel Acker | Bloomberg | Getty Images

"If you look at how far this selloff [in bonds] has transpired, and how fast and how far yields have risen, by pretty much any measure of momentum, we're at levels which historically we tend to pause at," Curry said.

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He still believes that "this is still very much a bear trend" for bonds. But Curry needs to see some of the bearish sentiment leave the market before he predicts that the trend will resume.

"We need to see some of these momentum indicators and sentiment indicators unwind and move back toward neutral levels before we say, OK, this thing has probably consolidated enough," Curry said. "And then, at the end of the day, every technician's going to look at price. We need to see signs that price say the larger uptrend is poised to resume as well."

Once it does, however, Curry believes that yields will go much higher. "We must stress that lower yields are corrective and temporary," he said.

—By CNBC's Alex Rosenberg. Follow him on Twitter: @CNBCAlex.

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