Fed Cattle Hits Value Area Resistance – Cash Firm

January 12, 2017 2:29AM CST

Every two weeks since the live cattle futures bottom in October, my blog entry has been in “Ground Hog Day” mode. I talked about the long term value area around 92-93 and we swiftly bounced off that level and never looked back. The weekly and monthly charts developed an impressive “V” bottom and the daily charts fulfilled head and shoulders targets. Strong long-term value areas have been reached on the upside and monthly 50% fib price level around 113 now serves as support while the 130 area is the peak of the monthly value area. My previous posts targeted the 117-120 area and the trade hit this area when the continuation charts reflected the roll from Dec 16’ to Feb 17’.

Where do we go from here? Cash is trading in the high teens and being offered around 120. Seasonals should support and exports have been strong despite the strong US$. There are signs of retailer discounting that should support demand and possibily recapture some market share. In years past this area’s sports season started at Soldier Field in the Fall. Now as football popularity declines and our team struggles, the grills will burn more come Spring training and well into opening day.

Traders should favor the long end and respect the confident consumer. Action may get choppy and I anticipate a range between 113-130 in the next few months. Strength should favor Feb contracts but longs should should use Feb/Apr spreads to roll some of any gains if fed cattle breaks out towards 125-130.

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Live Cattle Weekly Chart
Source: Track'nTrade

Livestock Weekly

Live Cattle Monthly Chart
Source: Track'nTrade

Livestock Monthly

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