Contraction Precedes Expansion

10-Year Treasury Note Futures, Daily Chart

The T-Note continues to cascade lower without even a minor retracement to add to the short. The yield on the 10-year T-Note has jumped about 100 basis points in the last month, which is nothing to sneeze at. Longs are clearly scrambling to reduce their positions; shorts should trail a stop to lock in profits.

10-Year Treasury Note Futures, 30-minute Chart

You can see how price coiled tighter last Thursday and Friday before the big breakdown yesterday. Narrow ranges often precede big moves, so you have to be very mindful of range contraction when trading. Sophisticated charting programs can color code your bars so that the narrow ones stand out, which is handy.

10-Year Treasury Note Yield, 30-minute Chart

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