December Live Cattle
We discussed a couple of scenarios in yesterday’s posting regarding the potential price path for the December Live Cattle. In assessing that the line of contention at 112.750 would come under attack in early trading the question remaining was would it hold and successfully turn back the bearish thrust. What we witness in today’s action answered the question as Dec cattle made a charge at 112.750 holding up at 112.900 while posting diverging momentum readings at the point. Prices recovered off the low gaining momentum after a successful breach of the hourly speed line at 114.100 as they followed through and reached for the channel come back level and weekly open convergence zone at +/- 115.150 topping out at 115.475 before easing to settle at 114.900. With a successful settle above speed-line resistance the market now must withstand any future pressure not allowing for a close below 114. If the low we saw today marked the fourth wave bottom then the market needs to rise impulsively in a five wave sequence to challenge or breach the 117.725 extreme. First line resistance comes in at +/-116.500 with overhead channel extension checking in at +/-120. On the other hand should we see a close below 114 the door will be open for a likely violation of 112.750 with a follow through to +/-111.500. If this were to develop I’d be expecting a future decline extending below the mid-September lows of 106.725.