Large Scale Monthly Measured Move in Ten Year Note

Sep 20, 2009: 7:53 PM CST

I wanted to show a higher timeframe “Measured Move” pattern that played out on the monthly timeframe in 10-Year Treasure Notes ($UST) from 2000.  It’s an interesting example of the ‘fractal’ nature of price and higher timeframe structure and targets.

A “Measured Move” pattern – also known as an “AB = CD Pattern,” is very similar to a Bull or Bear flag in practice.  The same price break above the upper trendline generates a ‘price projection target’ that is equal to the “pole” or initial upward move.

The “ABC” letters you see are not Elliott Wave notation, but are just reference points to show that the upward ‘leg’ or impulse from 200 to 2003 had the same three-wave progression as the 2006 to 2008 impulse.

Rather than saying anything about the future here, this is just calling attention to this pattern which played out almost over a full decade.

It’s interesting to note that price hit the target of $130 in advance of the time component or angle of ascent off the 2006 lows.

This is also a lesson in setting price targets off price patterns themselves.

As for the future, I’ve drawn a Fibonacci grid off the 2000 lows to the December 2008 price highs and the resulting grid is shown.

We’d remain bullish bonds/notes so long as price here in the index remains over the $115 level, which reflects the confluence of the 50% Fibonacci retracement as well as the 20 and 50 week exponential moving averages.

Any break of the $114 index level would be considered quite bearish and could lead to a retest of the $117 lows.

Study this pattern deeper for additional insights.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter:  http://twitter.com/afraidtotrade

4 Comments

4 Responses to “Large Scale Monthly Measured Move in Ten Year Note”

  1. Tim - TraderInterviews.com Says:

    I've been watching for AB=CD patterns quite a bit lately and they are pretty reliable! Good thoughts here Corey, thanks.

    Tim

  2. Corey Rosenbloom, CMT Says:

    Thanks Tim!

    The Flags and the AB=CD Patters have become my favorite as well – very easy to spot, stop is small relative to the target, and the target is clear. Plus, the patterns form more frequently that other classic patterns.

  3. Tim - TraderInterviews.com Says:

    I've been watching for AB=CD patterns quite a bit lately and they are pretty reliable! Good thoughts here Corey, thanks.

    Tim

  4. Corey Rosenbloom, CMT Says:

    Thanks Tim!

    The Flags and the AB=CD Patters have become my favorite as well – very easy to spot, stop is small relative to the target, and the target is clear. Plus, the patterns form more frequently that other classic patterns.