Ten-Year Futures Long Term Analysis

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Hey guys so hopefully Tim will put this up, I know that I don't post that much (user-name bouje) but hopefully you'll like what I have to say about the TY. 

First fundamentally as Tim has mentioned before the Ten Year and U.S. Treasury futures in general should (in the long run) continue on a down-ward path.  This is because eventually one of these things will happen:

A:  Foreigners will stop buying U.S. debt (or China will start selling it)

B:  The U.S. will eventually have to start raising rates because inflation will become a problem and we do not want to repeat the mistakes of Japans lost generation.

Now I know that none of you come here for fundamentals but I feel like it's a good idea to try to blend the two together so with that said here are 3 charts.  First up the Monthly TY chart:

TY.oct.21 

As can be seen from this chart I think that there is a HUGE H&S pattern with the LS being formed in 2008 around 120, the H being formed at the beginning of 2009 around 128 and the RS just formed around 120.  Also look at the descending trend-line (will be blown up later in the weekly and daily charts).  Also notice the declining volume and the broken MACD and RSI trend-lines and the Divergence in the RSI and the price graph from the LS to the H.  Finally, look at the fibs lining right up at 120.  The neckline can be seen to be around the 113/114 area.  The measured move if the neckline is broken would be 14 points which would put the TY at 100!  (which is a HUGE move).  Now let's take a look at the weekly:

TY.OCT.21 

Notice here that the weekly upward sloping trendline on the MACD that was broken on the down-move in the middle of 2009 (this shows that the weekly trend is no longer up).  Also look at the end of the chart where the MACD looks to have curled over and is threatening to cross bearishly.  I know that some of  you might bring up the fact that on this chart the H&S pattern looks to be a more complex one with 2 LS formed already but in the grand scheme of things it really doesn't change the outlook that the Ty should continue downward.  Finally here is the Daily chart:

TY.OCT.21 

As can finally be seen in this chart the TY has been in an uptrend for 6 months and is currently at it's trend-line for this move.  As can be seen from the MACD though as the Price has made higher highs the MACD has failed to make higher highs.  You can also see that the MACD trend-line from 8 to now has just been breached ever so slightly.  IF the TY makes a lower low the trend-line will really break and all of the longer term charts will also start to break. 

In sum: The TY is a fundamentally bearish play.  The charts show only about 2 points of upside risk (1000$ a point per 1 lot) and 20 points of downside risk if the H&S plays out.  IMO this is a great risk to reward.  So the options are:

1.  Wait until a confirmed break of the uptrend and sell

2.  Wait until the TY rallies back up to the 119/120ish area. 

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