Triangle Ranch: June Live Cattle

John LunneyGeneral Commentary

June Live Cattle

     The cows opened slightly higher pressing up to overhead cross zone resistance at 107. Unable to fortify this level prices stumbled back to turn negative on the day. The market steadily gave up ground to post a low of 105.350 and closed just off the extreme at 105.600. There’s been a lot of back and forth action over the last 5 sessions leaving a lot of players scratching there heads. One thing appears clear to me is that the structural nature of the recent rise off 97 is a non-impulsive. These can be very tricky to grasp let alone trade. Another perception of mine is that there looks to be either an b or  x wave triangle which has developed from the breakdown and subsequent activity off the high of 107.825. This is a complex structure. This should be destine to break out in either direction. Any slip to +/- 105 would have to hold above the 104.600 inner low. This might be the e wave extreme of the triangle. Should this play out the contract will look to once again advance to the upper d wave high of 107.10. A violation of this level should trigger a follow through. My first overhead channel projection comes in at +/-109. As mentioned before a complex non-impulsive market structure is a tough one to handle and one must remain, as always, open minded. That being said, should the contact fail in its attempt to breakout to upside one could argue the case of that failed rally marking the e wave of a bearish triangle. If that were to unfold the market will descend  through the 104.600 price and most likely follow through roughly 102.700. With the week opening at 106 and having an ATR reading (average true range) of over 4.000 it would to me seem reasonable to me that we will either make a run at 110 or slip to 102 to establish the range. In my opinion option strategies should be employed to take advantage of either of these scenarios playing out. Please reach out to me at Walsh Trading to discuss these and other strategies to take advantage of this information.

312-957-8108