Interim T-Note Strength Still Capped by Broader Range

August 4, 2017 9:13AM CDT

Yesterday's late poke above 21-Jul's 126.12 high nullifies the bearish divergence in momentum and resulting bearish count discussed in 25-Jul's Technical Blog and obviously resurrects the uptrend from 06-Jul's 124.255 low shown in the 240-min chart below.  This resumed strength leaves corrective lows in its wake at 125.31 and 125.15 that now serves as our new micro- and short-term risk parameters from which non-bearish decisions like short-covers and cautious bullish punts can be objectively based and managed.  These specific and objective risk parameters may come in very handy given 1) this morning's release of the key Aug nonfarm payroll report and 2) the market's engagement of the upper-quarter of the past couple months' range that poses a slippery slope for bulls "up here".

10 yr Treasury 240 min Chart

 

10 yr Treasury Daily Chart

The daily close-only chart above shows the pertinence of 14-Jun's 126.295 high that remains intact as a key resistant cap and risk parameter following the extent and impulsiveness of Jun-Jul's decline.  Left unaltered by a recovery above 126.30, a major peak/reversal PROCESS remains arguably intact with the recovery from 07-Jul's 124.27 low still well within the bounds of a (B- or 2nd-Wave) correction of Jun-Jul's break within that process.  In this longer-term regard 126.30 remains as the risk parameter the market needs to recoup for long-term players to jettison a still-advised bearish policy.

Basis actual 10-yr yields below 14-Jun's 2.122% low remains intact as the key rate the market needs to break below to resurrect the decline from 13Mar17's 2.626% high.

Broker Daily Chart

 

The Fibonacci fact that this short-term mo failure stems from the (16.90-area) 50% retracement of Apr-Jul's 18.655 - 15.145 decline on a daily log scale basis above would seem to contribute to at least an interim peak/reversal-threat call.  On the heels of the extent and impulsiveness of Jul's rally however as well as still depressed levels in our RJO Bullish Sentiment Index of Managed Money positions reportable to the CFTC, a major base/reversal-threat environment remains intact until the market breaks 10-Juls obviously key 15.145 low and long-term risk parameter.  While the market remains below at least 16.75 however, price levels between spot and Jul's 15.145 low are in play with respect to an "interim" correction.

These issues considered, shorter-term traders are advised to move to a neutral-to-cautiously-bearish stance from at-the-market (16.35) OB ahead of a correction of indeterminable scope.  Long-term players are advised to pare bullish exposure to more conservative levels and to the point that they can weather a major failure below 15.145 to negate a bullish count altogether.  Strength above 16.75 is required to not only negate this update but also resurrect a broader bullish count that could expose steep gains above 16.96.

10 yr Treasury Weekly Chart

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.