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T-Notes, Eurodollars Define New S-T Bear Risk Levels

Posted 10/08/2018 8:32AM CT | RJO Market Insights

 DEC 10-Yr T-NOTES

Fri and overnight’s continuation of the secular bear market below Thur’s 117.195 low leaves Thur’s 118.01 high in its wake as the latest smaller-degree corrective high the market is now required to sustain losses below to maintain a more immediate bearish count.  Its failure to do so will confirm a bullish divergence in short-term momentum and likely complete a textbook-looking 5-wave Elliott sequence down from 28-Sep’s 119.00 larger-degree corrective high and key long-term risk parameter.  Per such, shorter-term traders with tighter risk profiles are advised to use 118.01 as our new short-term risk parameter from which a bearish policy and exposure can be objectively rebased and managed.

10-Year Note Dec '18 240 Minute Chart

 

10-Year Note Daily Chart

Needless to say against the backdrop and magnitude of the secular bear trend shown in the daily (above) and weekly active-continuation (below) charts, such a short-term mo failure above 118.01 would only allow us to conclude the end of the downtrend from 28-Sep’s 119.00 next larger-degree corrective high, NOT the end of the major downtrend.  Indeed, even after a bullish divergence in short-term mo above 118.01, the market would remain below key former 118.11-area support-turned-resistance, let alone 28-Sep’s 119.00 corrective high this market is MINIMALLY required to recoup to threaten the long-term bear.

These issues considered, a bearish policy and exposure remain advised with a recovery above 118.01 required for shorter-term traders to pare or neutralize bearish exposure.  Commensurately larger-degree strength above 119.00 remains required for long-term players to take similar defensive action.  In lieu of such strength further and possibly accelerated losses remain expected.

10-Year Note Weekly Chart

DEC19 EURODOLLARS

The technical construct and expectations for the Dec19 Eurodollar market are identical to those detailed above in 10-yr Treasuries with Thur’s 96.79 high and 02-Oct’s 96.885 high serving as our short- and longer-term risk parameters to a still-advised bearish policy.

Eurodollar Dec '19 240 Minute Chart

 

Eurodollar Dec '19 Daily Chart

Eurodollar Dec '19 Weekly Chart

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