Short term Elliott wave view in Ten Year Notes (ZN) suggests the decline from August 5, 2020 high is unfolding as a 5 waves impulse Elliott Wave structure. Down from August 5, 2020 high, wave 1 ended at 136 and bounce in wave 2 ended at 137’2. The Notes then extended lower and ended wave ((3)) at 130’2. Bounce in wave ((4)) is proposed complete at 137’245.
Wave ((5)) lower is currently in progress but it still needs to break below the previous low at 130’2 to rule out a double correction. Structure of the decline from wave ((4)) looks impulsive in 5 waves with a divergence at the end of wave 5 of (1), favoring further downside. Down from wave ((4)), wave 1 ended at 132 and rally in wave 2 ended at 132’23. The Notes then extends lower in wave 3 towards 132’25 and wave 4 bounce ended at 132’06. Final leg lower wave 5 ended at 131’18 and this also completed wave (1) of ((5)).
Wave (2) rally is in progress to correct cycle from April 22 peak (132’245) before the decline resumes. As far as pivot at 132’24 high stays intact, expect rally to find sellers in the sequence of 3, 7, or 11 swing for further downside.
