The June contract broke down yesterday (Monday, March 27, 2017) trading down and almost making new low from the March 22nd anchor candle. The anchor candle is the large bullish breakout solid green candle that price has just retraced all the way to the candle low. Today’s trade took price to the candle’s low (111.25) a couple of times and couldn’t break through. This set up a potential double bottom and a rally above the Tuesday high (112.525) could lead to a test of the March 23 high (114.20). A breakout above here could see price test the 115.05 and 116.025 resistance levels. A breakdown from the low has the 200 DMA nearby at 110.90 and then109.80 and 108.35.
After the Monday meltdown, where the May Feeder Cattle broke through and closed below the 131.75 support level, Tuesday’s trade was all about consolidation. It made multiple attempts to break out above the 131.75 level and a couple of attempts to take out Monday’s low (130.85) but was unsuccessful at both (low – 131.00). Tuesday’s high (131.975) was much lower than the Monday high (133.575) and with today’s low higher than yesterday’s low the session formed an inside candle. Trading below the Tuesday low could lead to a test of support at the 200 DMA (130.225). Support then comes in at the gap area from the 3/15 low (129.10) to the 3/15 high (129.025). A breakout above today’s high could test resistance at 133.00 and then134.175.
June Lean Hogs traded down to support at 72.875, making its low at 72.30. It closed below support and follow through to the downside could see price test support at 71.60 and then 70.00. A rally through the 73.75 high could lead to a test of resistance at 74.225 and then 77.90.
For those interested I hold a weekly livestock webinar on Friday, March 31 at 3:00pm. It is free for anyone who wants to sign up and the link for sign up is below. If you cannot attend live a recording will be sent to your email upon completion of the webinar.
Senior Market Strategist
Walsh Trading, Inc.
RISK DISCLOSURE: THERE IS A SUBSTANTIAL RISK OF LOSS IN FUTURES AND OPTIONS TRADING. THIS REPORT IS A SOLICITATION FOR ENTERING A DERIVATIVES TRANSACTION AND ALL TRANSACTIONS INCLUDE A SUBSTANTIAL RISK OF LOSS. THE USE OF A STOP-LOSS ORDER MAY NOT NECESSARILY LIMIT YOUR LOSS TO THE INTENDED AMOUNT. WHILE CURRENT EVENTS, MARKET ANNOUNCEMENTS AND SEASONAL FACTORS ARE TYPICALLY BUILT INTO FUTURES PRICES, A MOVEMENT IN THE CASH MARKET WOULD NOT NECESSARILY MOVE IN TANDEM WITH THE RELATED FUTURES AND OPTIONS CONTRACTS.