December Live Cattle
As suggested in yesterday’s post the December live cattle contract had a difficult time breaching the overhead channel line which set the high in Monday’s session and came in lower today at 113.300. In today’s action the market posted a high at 113.025 and backed off to close just off the lows of 111.400 at 111.550. Also of note was the potential evening star candle formation which developed yesterday. Underneath support comes in at the cross zone convergence level of +/- 110.800. This location also coincides with the .618 retracement level which is quite common in wave (ii) counter trend moves. Further more last weeks candle engulfed the previous weeks body high at this point. Considering all this I would have to argue,in the event of more downside action, that the market would get a reaction here. Should the market rebound and managed to close back above +/-112.300 it will be poised to once again challenge the channel line which comes in tomorrow at 113. Looking ahead, a fortification of this level sets up a run at +115.200. Full overhead extension level comes in above at +/-122. Conversely a breakdown below 110.500 won’t look healthy. This would open the door for a follow through to +/-109.500.
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