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Agricultural

Cattle Rebound Intact Above $101.60 S-T Bull Risk

Posted 04/26/2018 11:54AM CT | RJO Market Insights

The longer-term directional jury remains out as to whether this month’s recovery is merely a correction within the broader bear from last Nov’s 121.525 high or the start of a more significant reversal higher. As a direct result of Tue’s break above 17-Apr’s previous 106.175 high however, AT LEAST the intermediate-term uptrend has been reaffirmed with the important by-product being the market’s definition of 20-Apr’s 101.625 low as the latest smaller-degree corrective low the market is now minimally required to sustain gains above to maintain a more immediate bullish count. In this regard we’re considering 101.60 as our new short-term risk parameter from which traders can objectively rebase and manage the risk of a bullish policy and exposure.

A relapse below 101.60 will render the recovery from 04-Apr’s 97.075 low a 3-wave and thus corrective event that would then re-expose the major downtrend.

Live Cattle Jun '18 60min Chart

Live Cattle Jun '18 Daily Chart
While commensurately larger-degree strength above 11-Jan’s 110.275 (prospective 1st-Wave) low and former key support-turned-resistance remains required to truly negate the 5-month bear trend, it’s not hard to find technical factors supportive of a broader base/reversal count, like:

  • the market’s rejection of the extreme lower recesses of the year-and-a-half range on a weekly active-continuation chart basis below amidst
  • the return to a nearly-2-year low in our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC and
  • the Fibonacci fact that this year’s resumed decline from Feb’s 127.95 high is virtually identical in length (i.e. 1.000 progression) to May0Aug’17’s preceding decline from 134.55 to 104.20.

These are compelling reasons to believe that this market might not only continue to trend higher, but that it might be particularly vulnerable to potentially steep, accelerating gains straight away. These issues considered, a bullish policy and exposure remain advised with a failure below 101.60 required to move to the sidelines.

Live Cattle Weekly Chart

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