The past couple days’ clear break above the 139.22-area that has capped this market as resistance since 21-Apr reaffirms the secular bull market in 10-yr T-Notes and leaves Tue’s 139.08 low in its wake as the latest smaller-degree corrective low this market is now minimally required to fail below to even defer the bull, let alone threaten it. Per such, this 139.08 low is considered our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively rebase and manage the risk of a still-advised bullish policy and exposure.
Former 139.22-area resistance, since broken, would be expected to hold as new near-term support heading forward.
From a longer-term perspective shown in the daily active-continuation chart above, we can debate the technical pertinence of 09-Mar’s 140.24 arguably rogue intra-day high. Indeed, fully three months of pretty specific resistance around 139.22 is arguably much more important. Basis actual 10-yr yields below however, 09-Mar’s 0.536% low close is relevant. The trend in rates is clearly down. And if Mar/Apr’s support around 0.57%-to-0.53% is going to hold, then the market needs to prove it with a recovery above at least 27-Jul’s 0.617% corrective high. This rater level correlates with the 139.08 corrective low in the contract as a short-term risk parameter. Until and unless such 0.617%+ rate levels are achieved, the downtrend in rates should hardly come as a surprise.
As with the major uptrend in gold, the invariable questions are “How much further can this uptrend continue? Where is resistance? Where can we sell because we know there’s a high in here someplace?”
As there’s never an objective way to know how high “high” is, the question we believe should be asked under such uptrending circumstances is, “Where should the bull NOT trade to remain intact?” The answer to this question is easy and objective: below a prior corrective low or an initial counter-trend low needed to confirm a bearish divergence in momentum. Specifically in this case, weakness below Tue’s 139.08 corrective low is minimally required to break the short-term uptrend pertinent to shorter-term traders with tighter risk profiles. Commensurately larger-degree weakness below 05-Jun’s 136.22 next larger-degree corrective low remains required to threaten the secular bull trend. Until and unless such weakness is proven, further and possibly accelerated gains remain expected and the risk to a continued bullish policy is precise and objective.
Fading this clear and present uptrend because the “market is ‘overbought’ and/or because there’s ‘gotta be a high in here somewhere'” is not only outside the bounds of technical discipline, most importantly, there is no objective risk parameter to a bearish decision “up here”. None.
From an even longer-term perspective shown in the weekly chart of the contract below, it is not hard to find threats to the bull in the form of:
- an arguably completing and major 5-wave Elliott sequence up from Oct’18’s 117.13 low
- waning upside momentum and
- historically frothy bullish sentiment.
But none of this matters until and unless the market breaks the simple uptrend pattern of higher highs and higher lows. A failure below Tue’s 139.08 short-term risk parameter could be a start as reversals gotta walk before they can run, but a commensurately larger-degree failure below 05-Jun’s 136.22 larger-degree corrective low is the key gateway to a major peak/reversal threat. Until at least sub-139.08 weakness is proven, the trend is up on all scales and should not surprise by its continuance. Per such, a bullish policy and exposure remain advised with a failure below 139.08 required to pare or neutralize exposure commensurate with one’s personal risk profile.