As shown by the weekly chart below, the ZB (Electronic 30 year bond contract) has reached a major target extension:

Click on image to enlarge!

There are no additional longer term targets in play unless we see a break of the major .786 resistance at 128’03. Since we’ve made the outstanding major target with overlapping price projecting resistance, this is a prime spot for at least a pullback.

A closer look at the daily chart of the June front month on this contract shows that the weekly target also had an overlapping daily target from the most recent swing:

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The red trendlines show how this target was calculated; multiplying the prior high to low by a factor of 1.272. Also note that the 50 CCI was showing a strong divergence from price with lower highs as price made higher highs into the target zone. I’ve also identified a key support zone on the daily chart by measuring prior corrective swings in the context of the rally and projecting 100% of those corrections from the new high. These symmetry levels mix in with key retracement support levels run from the prior low to the current high. Note that even with that divergence, the 50 CCI is still above +100; a solid reminder we may see a continued rally from here.

One more step to a lower timeframe. The next chart is a 24 hour 50 minute chart that we use in our chat room:

Click on image to enlarge!

You can see that the current decline has hit the 1.272 target of the swing into the high. This is the minimum level that I’d like to see on a corrective decline from such an important target zone on the higher timeframes. Now the question is whether or not this continues to drop from here, or if we see a recovery based on the daily upside pattern. CCI on the intraday and the daily will point the way. If this support is going to hold, we’ll see a break of the 50 CCI above -100 for a start. The current 50 CCI reading is circled near the bottom of the chart. A further cross above zero would indicate that our 50 CCI +100 line is indeed holding on the daily. A bounce at the daily +100 line would imply that we’ll see a new daily swing high. For the moment the focus is on the intraday chart to provide clues as to longer term directionality.

For more from Mark including his “Chart of the Day”, visit MJBraun.net.