I’m starting Monthly Analysis off with a tough one again, leading off with a look at the long-term continuous nearby chart for the US 10-year T-notes. At first glance the 10-year looks to have completed its previous major (long-term) downtrend with the April low of 130-255, leading to a higher monthly close and a continued rally during May. Last Friday saw the nearby June contract close at 132-275, up 0-265 for the month. However there are a couple reasons to thing this should be seen as a secondary (intermediate-term) uptrend within a continued major downtrend.
- Monthly stochastics posted a bullish crossover, but the rally into the end of the month pulled this long-term momentum study back above the oversold level of 20%. This leaves the door open for an eventual extension of the major downtrend with the next target near 129-040. This price marks the 50% retracement level of the previous major uptrend from 117-165 (October 2018) through the high of 140-235 (March 2020). This extension would be expected to pull stochastics back below 20%, setting the stage for a crossover that would signal a coming change in the major trend.
- Based on the Benjamin Franklin Fish Similarity (Like fish and guests, contracts and markets start to stink after three time periods moving against the prevailing trend.), the 10-year T-Note could extend its secondary uptrend during June before turning down again. The upside target area is between 134-189 and 135-245 with the possibility of extending the move to the high end of the range at 136-300.
The previous 4-month high is at 137-095.
