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SEP 10-Yr T-NOTES
Yesterday’s break below 28-Jul’s 139.08 corrective low confirms our peak/reversal-threat suspicions discussed in Tue’s Technical Webcast and 05-Aug’s 140.13 high as one of developing importance and possibly a major high. The extent and impulsiveness of the past week’s relapse is impressive and, for longer-term reasons discussed below, cannot be overlooked as just the start of a peak/reversal environment that could be major in scope. Per such, that 140.13 high continues to serve as an increasingly key and certainly objective risk parameter from which non-bullish decisions like long-covers and bearish punts can be objectively based and managed.
![](https://rjofutures.rjobrien.com/images/2020/08/10yr-note-240min-chart.gif)
![](https://rjofutures.rjobrien.com/images/2020/08/10yr-note-daily-chart.gif)
The daily chart of the contract above shows yesterday’s failure below 28-Jul’s 139.08 corrective low that breaks Jun-Aug’s portion of the secular bull market. This is a technical fact that leaves 05-Aug’s 140.13 high in its wake as THE high this market is now required to recoup to mitigate a peak/correction/reversal count and reinstate the secular bull. On a 10-yr yield basis below, the recovery above 27-Jul’s 0.617% corrective high does the same thing, identifying 04-Aug’s 0.504% low as the end of at least Jun-Aug’s 0.898% – 0.504% decline and an objective risk parameter from which to base higher rate decisions.
Of course and as always, we cannot conclude a major reversal from proof of just smaller-degree weakness in the contract. Indeed, commensurately larger-degree weakness below 05-Jun’s 136.22 larger-degree corrective low remains required to break the secular bull trend. It would be premature for long-term players to give up on the secular bull until and unless this 136.22 low is broken. However, it would not be inappropriate for long-term players to pare bullish exposure to more conservative levels and exchange whipsaw risk above 140.13 for deeper nominal risk between spot and 136.22.
![](https://rjofutures.rjobrien.com/images/2020/08/10yr-yiled-daily-chart.gif)
Moving back even further, indicting evidence for a peak/reversal threat that could be major in scope includes:
- waning upside momentum on a massive weekly basis below
- an arguably complete 5-wave Elliott sequence that dates from Oct’18’s 117.135 low and
- historically frothy sentiment this year that hasn’t been seen since that that warned of and accompanied Jul’16’s major peak and reversal.
Again, commensurately larger-degree proof of weakness below 05-Jun’s 136.22 next larger-degree corrective low remains required to CONFIRM a bearish divergence in momentum that will break the secular bull trend. But until this market recovers above 140.13, we anticipate further lateral-to-lower prices in the period ahead that could morph into a major reversal lower. These issues considered, a bearish policy is advised for shorter-term traders with tight risk profiles with a recovery above 140.13 required to negate this call. And recovery attempts to roughly the 139-3/4-area or higher would be advised to first be approached as corrective selling opportunities. Long-term players are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 136.22.
![](https://rjofutures.rjobrien.com/images/2020/08/10yr-note-weekly-chart.gif)
SEP GERMAN BUNDS
![](https://rjofutures.rjobrien.com/images/2020/08/eurobund-240min-chart.gif)
Today’s continued erosion below 24-Jul’s 175.95 corrective low reaffirms our peak/reversal count discussed in Tue’s Technical Webcast and confirms 31-Jul’s 178.01 high as one of developing importance and very possibly the start of a C- or 3rd-Wave down that could break 19-Mar’s 170.87 low. This bearish count is based on the prospect that the recovery attempt from 19-Mar’s 170.87 low is a (textbook) 3-wave and thus corrective structure that warns of a resumption of Mar’s downtrend that preceded it. Further larger-degree verification will come from a break below 02-Jul’s 175.04 next larger-degree corrective low and key risk parameter.
![](https://rjofutures.rjobrien.com/images/2020/08/eurobund-sep20-daily-chart.gif)
The fact that this month’s bearish divergence in momentum stems from the extreme upper recesses of the past YEAR’S range would seem to question the risk/reward merits of a continued bullish policy “up here” and reinforce a peak/correction/reversal threat that could be major in scope. And the goings-on in U.S. Treasuries certainly would seem to reinforce this call as well. These issues considered, traders are advised to maintain or move to a bearish policy and exposure with a recovery above 178.01 required to negate this call and warrant its cover. In lieu of such 178.01+ strength, further and possibly accelerated losses straight away should not surprise with a failure below 175.04 opening the spigot.
![](https://rjofutures.rjobrien.com/images/2020/08/eurobund-weekly-chart.gif)