The extent and impulsiveness of the relapse from 26-May’s 120.195 high is sufficient to define that high as the end or upper boundary of a clear 3-wave recovery from 09-May’s 116.21 low in the Sep contract.  Left unaltered by a recovery above 120.195, this 3-wave recovery is considered a corrective/consolidative structure that is consistent with our long-term bearish count and warns of an eventual resumption of the secular bear market to new lows below 116.21 in this contract and below 117.085 on an active-continuation basis.

On a short-term basis, the 240-min chart below shows Fri and today’s continuation of this slide that leaves Thur’s 118.31 high in its wake as the latest smaller-degree corrective high this market is now minimally required to recoup to confirm a bullish divergence in short-term momentum, arrest the slide and expose an intra-range rebound.  Per such, this 118.31 level serves as our new short-term risk parameter from which shorter-term traders with tight risk profiles can objectively rebase and manage the risk of a continued bearish policy and exposure.

On a long-term basis and as discussed in 12-May’s Technical Webcast following 11-May’s bullish divergence in momentum, the ensuing recovery attempt was advised to be approached as a mere correction against the magnitude of the secular bear market.  Today’s weakness reinforces this long-term bearish count and now highlights 26-May’s 120.31 high on an active-continuation basis (120.195 basis the Sep contract) and that day’s 2.702% low on a 10-yr yield basis below as our new key long-term risk parameters from which a resumed bearish policy and exposure can be objectively rebased and managed by longer-term institutional players.

As 09-May’s key 117.085 low in the contract and 3.203% high in yield remain intact, we cannot ignore the prospect for further aimless, consolidative chop within the past month’s range.  But until and unless this market can recoup 26-May’s 120.31 high in contract price and/or break below 2.7025 low in yield, a resumption of the secular bear trend in the contract and rise in 10-yr rates is fully anticipated.

The weekly active-continuation chart of the contract below shows the sheer magnitude of the secular bear market and the thus far paltry mid-May recovery attempt that falls well within the bounds of a mere correction within that secular bear trend.

These issues considered, a bearish policy and exposure remain advised with a recovery above 118.31 required for shorter-term traders to move to the sidelines and commensurately larger-degree strength above 120.195 in the Sep contract for long-term players to follow suit.  In lieu of such strength, further and possibly accelerated losses are anticipated, including a resumption of the secular bear trend to new lows below 117.085.


The technical construct and expectations for the Dec23 eurodollar contract are identical to those detailed above in T-notes with smaller- and larger-degree corrective highs and short- and long-term risk parameters identified at 96.835 and 97.105, respectively.

In lieu of a recovery above at least 96.835 and preferably 97.105, a resumption of the secular bear trend to new lows below 96.42 is expected and traders should re-position according to their personal risk profiles.

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