Since topping out at 135.15 on July 2012, 10 Year Notes (ZN_F) was in a multi-year decline. It finally found a bottom at 117.13 on October 2018. The 6 year decline was in a large 3 swing, thus the decline was corrective. It has since started to rally again from 117.13 low. The rally has the characteristic of an impulse Elliott Wave structure. In the short term chart below, we can see the impulsive rally from 2018 low ended wave III at 132.13 on September 3.
Wave IV pullback has now reached the minimum target to end at the blue box. The pullback unfolded as a double zigzag Elliott Wave structure where wave ((W)) ended at 130.27 and wave ((X)) ended at 131.15. Wave ((Y)) of IV is expected to complete at 129.17 – 129.29. Both wave ((W)) and ((Y)) have an internal subdivision of a zigzag (5-3-5). The Notes should find support from 129.17 – 129.29 and resume higher in wave V or bounce in 3 waves at least. In larger time frame, the Notes may eventually break above July 2012 peak again (135.15). If this happens, the Notes should open more upside in larger degree and we can see bond yields continue to decline across the board.