RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Interest Rates

S-T Bund Failure Could Have Broader Implications

Posted 02/28/2019 8:18AM CT | RJO Market Insights

Euro Bund Mar '19 240 Min Chart

Yesterday’s break below the past couple weeks’ 165.84-area support confirms a bearish divergence in shorter-term momentum but one that could lead to more protracted losses given the market’s recent proximity to the extreme upper recesses of the past 2-1/2-YEAR range.  As a result of this mo failure shown in the 240-min chart above, the market has defined 08-Feb’s 166.83 high as one of developing importance and possibly the END of a major 5-wave Elliott sequence up from 05Oct18’s 157.96 low as labeled in the daily log chart below.  Per such this 166.83 level becomes our new short-term risk parameter from which long-covers and cautious bearish punts can now be objectively based and managed.

Given the extensive backdrop of the 4-month rally, this momentum failure is of to small a scale to CONCLUDE the end of the major bull at this point.  Commensurately larger-degree weakness below 09-Jan’s 163.48 next larger-degree corrective low remains require to, in fact, break this major uptrend.  Per such this 163.48 low remains intact as our key long-term risk parameter from which longer-term players can still base and manage the risk of a bullish policy.

Euro Bund Mar '19 Daily Chart

 

Contributing to this peak/reversal threat and reason for a more conservative approach to risk assumption is the market’s proximity to the extern upper recesses of the past 2-1/2-year range shown in the weekly active-continuation chart below.  If there’s a time and place to be leery of a broader relapse, it is here and now from such upper-range, slippery slope conditions.

These issues considered, shorter-term traders are advised to move to a neutral-to-cautiously-bearish stance with a recovery above 08-Feb’s 166.83 high and our new short-term risk parameter required to negate this call.  Long-term players are advised to pare bullish exposure to more conservative levels and jettison the position altogether on a failure below 163.48.

Euro Bund Weekly Chart

RJO Market Insights