In this technical blog we’re going to take a quick look at the Elliott Wave charts of ZN_F (10 Year Note) published in members area of the website. As our members knew, we’ve been favoring the long side in USDJPY and hence we expected bounces in 10 year note to fail for extension lower as they trade inverse to USDJPY. ZN_F formed a low on June 14, 2022 (114’07) and started bouncing. This recovery rally took the form of double three Elliott wave correction and members knew it was nothing more than another selling opportunity for resumption of decline to a new low or for 3 waves reaction lower at least. In the remainder of the article, we are going to explain the Elliott Wave Pattern and talk about the strategy of blue box selling.
Before we proceed further, let’s explain Double Three Elliott Wave Structure.
Double Three Elliott Wave Structure is one of the corrective patterns in Elliott Wave theory. Double three is a sideways combination of two corrective patterns. There are several corrective patterns including zigzag, flat, triangle etc. When two of these corrective patterns are combined together, we get a double three. Wave W and Y subdivision can be zigzag, flat and double three of smaller degree or triple three of smaller degree. Wave X can be any corrective structure and double three is a 7 swing structure.
ZN_F (10 Year Note) 22 June 1 Hour Elliott Wave Update
Chart below shows 10 year note in a double three Elliott wave structure higher from June 14, 2022 low. It is currently showing 5 swings up and we expect pull backs to hold above June 21, 2022 low for another leg higher towards 100 – 161.8% Fibonacci extension area of wave W related to wave X which comes between 118’02 – 119’18. Clients knew a 7 swing correction should end in this blue box and we should see a turn lower to resume the rally in wave (3) or for 3 waves reaction lower at least.
We don’t like buying 10 year note against the main bearish trend. Strategy is favoring shorts once price reaches the blue box with bottom of blue box being the entry and top of blue box being the invalidation level for the trade idea. Once price reaches the blue box and reacts lower, we will make short positions risk free by either moving stop loss to entry position or taking partial profits and putting stop on remaining position above the high formed within the blue box. Invalidation for the trade would be a break above the top of blue box i.e. 1.618 Fibonacci extension level of W-X at 119’184. As our members know, Blue Boxes are no enemy areas , giving us around 80% or a higher chance to get 3 waves reaction at least from the blue box.
ZN_F (10 Year Note) 27 June 1 Hour Elliott Wave Update
We tweaked the wave count slightly to show wave ((3)) at June 14, 2022 low and called the corrective rally to be wave ((4)). Chart below shows ZN_F (10 year note) has found sellersat the Blue Box area and we are getting good reaction from there. Corrective rally completed at 118’08 as a double three Elliott wave structure. Decline from the blue box reached and exceeded 50% of the rally from blue (X) low. Consequently, members who have taken the short trades at the blue box are now enjoying profits in risk free trades. Now we would need to see break of June 14, 2022 low in order to confirm next leg lower is in progress. Until June 14, 2022 low doesn’t break, a double correction higher still can’t be ruled out in which case we would highlight the next blue box selling area for members.
Keep in mind that market is dynamic and presented view could have changed in the mean time. You can check most recent charts in the membership area of the site.Back