RJO FuturesCast

Daily Futures Market News, Commentary, & Insight

JUN 10-Yr T-NOTES

Overnight’s clear break below the 131-3/4-to-131-1/2-area that has supported this market for the past week-and-a-half reaffirms and reinstates our major peak/reversal count and leaves smaller-degree corrective highs in its wake at 132.09 and 133.01 that this market is now minimally required to recover above to even defer, let alone threaten the major bear trend.  Per such, these levels serve as our new micro and short-term risk parameters from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bearish policy and exposure.

Former 131.3/4-area support is considered new near-term resistance.

Only a glance at the daily (above) and weekly (below) charts is needed to see that the clear and present and arguably accelerating downtrend remains intact as the dominant technical factor, clearly reversing at least Oct’18 – Aug’20’s bull trend and, we believe, the generational bull that dates back to 1981.  The POTENTIAL for a bullish divergence in momentum is also noteworthy in the daily chart, but a recovery above 133.01 is required to CONFIRM the divergence to the point of non-bearish action like short-covers for shorter-term traders and paring bearish exposure to more conservative levels by longer-term institutional players.  In lieu of strength above at least 132.09 and preferably 133.01, the trend is down on all scales and should not surprise by its continuance or acceleration straight away.

These issues considered, a full and aggressive bearish policy and exposure remain advised with a recovery above 132.09 required for shorter-term traders to pare bearish exposure to more conservative levels and further strength above 133.01 required to neutralize exposure altogether and for longer-term institutional players to pare exposure to more conservative levels.  In lieu of such strength, further and possibly accelerated losses remain expected.

JUN GERMAN BUNDS

Overnight’s failure below 04-Mar’s 170.72 low confirms at least the intermediate-term trend as down and clearly identifies the 172.00-to-172.09-area as one of developing importance and a key risk parameter this market is now minimally required to recover above to negate a resumed bearish count that could include a resumption of the major downtrend from 11-Dec’s high to new lows below 169.24.  As the market remains a figure-and-a-half away from 25-Feb’s 169.24 low however, further lateral, consolidative chop within this 172.09-to-169.24-range is easily a possibility before the major bear resumes.  Nonetheless, given the backdrop of Dec-Feb’s broader downtrend and as discussed in 02-Mar’s Technical Blog following 01-Mar’s bullish divergence in short-term momentum, traders remain advised to first approach that late-Feb/early-Mar recovery attempt as a correction within the major downtrend ahead of its eventual resumption.  A close above 172.02 or an intra-day break above 172.09 will threaten this call enough to warrant a move to the sidelines by both short- and longer-term traders.

In light of the past week-and-a-half’s relapsing price action, we’re identifying 11-Mar’s spasm high of 172.20 as a rogue event with that high having no technical merit.

From a longer-term perspective, the weekly log active-continuation chart above shows the market’s engagement of the lower-quarter of its major 19-month lateral range where we do not want to underestimate the odds of another rejection and return to the middle-half bowels of this range.  Herein lies the importance of that 172.09 high and key risk parameter.

Until such 172.09+ strength is proven however, we likewise do not want to short-change the prospects for the same type of major reversal that’s unfolding in U.S. Treasuries to also afflict the bunds.  Indeed, a break below 19Mar20’s pivotal 167.52 low and massive area of former resistance-turned-support shown in the monthly log chart below would expose a peak/reversal environment that could be generational in scope.  If such a major bearish count is what this market has in mind, we would expect nothing less than sustained, trendy, impulsive price action lower.  A recovery above 172.09 would NOT be in keeping with such a count.

These issues considered, a bearish policy and exposure remain advised for longer-term institutional players with a recovery above 172.09 required to negate this specific call and warrant its cover.  Shorter-term traders whipsawed out of bearish exposure are advised to return to a cautious bearish positions from the current 170.70-area OB with a recovery above 172.09 required to negate this call and warrant its cover.  In lieu of such 172.09+ strength, further lateral-to-lower prices are expected in the period ahead, including the possible resumption of the major downtrend to new lows below 169.24.

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