RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

Yesterday and overnight’s clear break below the 130.015-to-129.31-area that has supported this market since 21-Oct reinstates the secular bear trend in the contract and leaves smaller- and larger-degree corrective highs in its wake at 131.08 and 131.305 that the market is now obligated to recoup to threaten and then negate a more immediate and potentially major bearish count.  Per such, these levels serve as our new short- and longer-term risk parameters from which a bearish policy and exposure can be objectively rebased and managed.

Former 130.00-area support is considered new near-term resistance that would be expected to hold er any broader bearish count.

The daily close-only chart (above) and weekly chart (below) of the contract show this week’s resumption of the major downtrend from Aug’20’s 140.13 all-time high.  A recovery above 131.305 is required to confirm a bullish divergence in momentum, break the downtrend from 04Aug21’s 135.14 high and expose an interim correction of this portion of the bear.  In lieu of a recovery above the risk parameters discussed above, this chart shows the trend is down on all scales and should not surprise by its continuance or acceleration.

HOWEVER…..

…On a 10-yr YIELD basis, the daily chart below shows the market still below 21-Oct’s 1.708% high, let alone this year’s pivotal 1.778% high posted on 30-Mar.  Today’s poke above 17-Nov’s 1.649% high resurrects at least the intermediate-term uptrend and this defines Fri’s 1.514% low as our new short-term risk parameter from which a call for higher rates can be objectively based and managed.  But to really reinforce a broader bearish count in the contract, rates have to bust out above at least 21-Oct’s 1.708% high and then maintain that rally to eventual 1.778%+ rates.  Until such rate gains are proven, traders are advised to approach the resumed bear in the contract suspiciously and be on close watch for a bullish divergence in even short-term momentum.

These issues considered, traders are advised to return to a cautious bearish policy and first approach recovery attempts to the lower-130-handle-area as corrective selling opportunities, but only after another bearish divergence in short-term mo stems such a rebound and defines a tighter but objective risk parameter.  In lieu of such conditions, a recovery above 131.08 is now required to threaten a broader bearish count where further and possibly steep losses should not surprise.

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