CBOT:ZN1!   10 Year T-Note Futures
ZN1!: Series on Bonds- Sept 20th 2019(4-5 minute read)

This is a two part analysis on the US 10 year Treasury note, the second part analyses the yield. In my opinion, technical analysis is somewhat (okay-ish) effective in analysing bond price action, especially to bonds with longer maturities. This is because they are priced in terms of private expectations. Which are based on market psychology principles that are one of the main foundations for technical analysis . Fundamentally, building models with matrixes of auctions prices is the better method, however as an individual retail trader with limited time, it's quite an unrealistic thing for me to do.

Now, let's begin by analysing the structural wave build up. The closing monthly top on Wave 1 after the 2001 recession(~117$) provided for the impulsive wave buildup. Unfortunately, I would have prefered if the data extended back to 1984 for a more accurate trend analysis, but from the current chart a precise EW buildup can be observed. Wave 3 (top 134) happened after the 2008 recession.

Both of these bullish waves continued to form, despite an official NBER recession ending announcement. In my opinion, a more accurate estimation of the recovery in the economy can be observed from the bond market as compared to purely basing such an observation from equities. Despite the official end of the recession being June 2009, the unemployment rate peaked later that year.
I know it's extremely inappropriate to perform a trend analysis on the unemployment rate, but this is just to support my previous argument and strictly informational.
What are the expectations moving forward? Similarly to the WXY 03'-07' expansion, the current WXY expansion (12'-19') is near its ending. Perhaps with the current "mid-cycle" rate adjustments and medium fiscal stimulus the cycle could extend. If a US/China deal gets done and cycle extension does happen, it won't completely undermine the increased probability of a recession in the next 3 years. What further complicates things are the 2020 US elections, Brexit and the cooling down situation in the Eurozone. Hence, I see a formation of a bullish triangle in Bond prices.
Zoomed in chart 2019-2023 potential triangle build up in case a cycle extension happens.
To sum up this analysis, in case a recession occurs, based on the wave build up- the maximum target for wave 5, would be in the range of 146-153. I am not sure if the Wave V would have have a 2.62 extension( based on the already low yields This analysis supports my previous extensive work on FED rate cycles(Link #1 below). The blurry WXY at the end of the chart is what I would expect during the next extension. I have to emphasize that I attempted to find a pattern in the Moving averages and other technical indicators, but came to the conclusion that they are simply not as precise as the Elliott Wave Setup. This is it for part one, make sure to check the much more complicated Part two Yield analysis on the 10 year US T Note.

P.s. Would appreciate some feedback charts or simple comments expressing your opinion on the bond market, thanks!

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Having a second look at the chart. In case bonds do not make a breakout this winter/spring and the cycle extends. They might enter a Head and Shoulders formation. Intuitively this would be quite reasonable and it's pretty decent find.


Detailed, informative and qualitative educational material. Thanks for the hard work, certainly helps me to see the bigger scale.

Do you think that the black-funds of the USA could potentially keep the patient alive for another 5-10 years?

Thanks for the support!

Considering the ongoing trade and fiscal deficit. It can't last forever. I am indifferent on black-funds and their importance to economics. In general terms, it's major.
+1 Reply
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