RJO FuturesCast

Daily Futures Market News, Commentary, & Insight


Yesterday and overnight’s relative collapse below the past MONTH’S support between 122.03 and 121.27 in the now-prompt Jun contract obviously is a display of at least short-term weakness and vulnerability.  The important by-product of this break is the market’s definition of yesterday’s 122.15 high as the latest smaller-degree corrective high and a level the market would now be expected to sustain losses below if the market has something broader to the bear side in mind.  Per such this 122.15 high is considered our new short-term risk parameter from which non-bullish decisions like long-covers and cautious bearish punts can now be objectively based and managed.  This tight but objective risk parameter may come in handy heading into this morning’s key non-farm payroll report. Now-former 121.28-to-122.03-range support would be expected to hold as new near-term resistance.

10-Year Note Jun '19 240 Min Chart

10-Year Note Daily Chart

Allowing for the specific technical level vagaries that often times accompany the rolls from one contract month to the next, yesterday’s 122.15 high in the Jun contract also shows to be the pertinent high just shy of 31-Jan’s 122.19 high in the then-prompt Mar contract following overnight’s confirmed bearish divergence in daily momentum shown in the daily active-continuation chart above.  For some clarity during this contract roll, the actual 10-yr yield from the underlying Treasury market below shows the same bullish divergence in mo that leaves Wed’s 2.627% low in its wake as the new and perhaps most precise short-term risk parameter from which bearish decisions in the contract can be objectively based and managed.

In light of these past 24 hours’ developments and from a longer-term perspective, we can now reconsider a broader peak/reversal count predicated on the prospect that 03-Jan’s 123.055 high (2.541% low in yield) COMPLETED a major 5-wave Elliott sequence up from 08Oct18’s 117.135 low as labeled above.  If correct, then this count would further contend that the recovery attempt from 18-Jan’s 121.02 low to yesterday’s 122.15 high completed the corrective (B- or 2nd-Wave) rebuttal of Jan’s initial (A- or 1st-Wave) counter-trend move down and that the market is on the cusp of the exciting (C- or 3rd-Wave) resumption of thie major peak/reversal process.

Commensurately larger-degree weakness below 18-Jan’s 121.02 low and key risk parameter remains required to CONFIRM this count and expose potentially extensive losses thereafter.  But until and unless this market recoups 122.15, such a sharp decline should not come as a surprise.

10-Year Note Daily Yield Chart


Finally, this past day’s relapse reinforces the 122-handle-area as the key resistance candidate we discussed back in Dec and contributes to a broader peak/reversal-threat environment.  This area was major former support for over a year and also the 50% retrace of 2017-18’s entire 127.28 – 117.13 decline.  The past month-and-a-half’s labored, 3-wave recovery attempt is consistent with such a broader peak/reversal environment.  These issues considered, traders are advised to establish cautious bearish exposure from current 121.24-area prices with strength above 122.15 required to negate this count and warrant its cover.  In lieu of such strength we anticipate further and possibly accelerated losses straight away.

10-Year Note Weekly Chart


Eurodollar Mar '20 240 Min Chart

The technical construct and expectations for the Mar20 Eurodollar contract are virtually identical to those detailed above in T-notes with a recovery above Wed’s 97.51 high and micro risk parameter required to negate this call.  In lieu of such strength we anticipate a break below 14-Feb’s 97.355 short-term risk parameter that will render Jan-Feb’s 97.265 – 97.51 recovery attempt a 3-wave and thus corrective structure warning of a resumption of Jan’s initial counter-trend decline that preceded it as part of a broader peak/reversal process from 03-Jan’s 97.635 high. to levels potentially well below 97.26.

In sum, traders are advised to move to a cautious bearish stance from current 97.40-area levels with a recovery above 97.51 required to negate this call and warrant its cover.

Eurodollar Mar '20 Daily Chart

Eurodollar Mar '20 Weekly Chart


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