10 Year US Notes Are Trapped in A Bullish Consolidation – Elliott wave analysis
10-year US notes fell sharply last week, which allowed stocks to move higher as yields rose. Technically speaking, this drop on 10 year should not be any big deal, or trend changer, as it appears to be just another leg within a complex correction that is underway since March. We are tracking an A-B-C-D-E triangle, currently with price positioned in sub-wave C which will usually move for 61.8% compared to distance of wave A. In that same zone we also see the 78.6% Fib. ratio of wave B, so it can be an interesting short-term support level down around 135’00. That said, maybe wave C is already looking for a support, but based on Elliott Wave guidelines, lower prices would be reasonable, before market turns up for wave D. Regarding the bigger picture, this move since March is a fourth wave, meaning that when correction is fully complete, a new rise into wave 5) will show up, but it may not happen so soon.
10-year US note 4h
A Triangle is a common 5-wave pattern labeled A-B-C-D-E that moves counter-trend and is corrective in nature. Triangles move within two channel lines drawn from waves A to E, and from waves B to D. A Triangle is either contracting or expanding depending on whether the channel lines are converging or expanding. Triangles are overlapping five wave affairs that subdivide 3-3-3-3-3.
Triangles can occur in wave 4, wave B, wave X position or in some very rare cases also in wave Y of a combination.
An example of an Elliott wave triangle pattern:
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