June live cattle futures at the Chicago Mercantile Exchange have seen a steep sell off from the recent contract high of $99.82. Prices last Friday gapped lower on the daily bar chart, hit a fresh three-week low of $94.20, and closed at the weekly low close to produce some fresh near-term technical damage. Key for the cattle market bulls now is to defend solid chart support at the $94.00 area. A close below $94.00 would produce more significant chart damage to begin to suggest that a near-term market top is in place.
The Moving Average Convergence Divergence (MACD) indicator overlaid on the daily chart for June live cattle futures has recently produced a bearish line crossover signal, whereby the MACD line crossed below the “trigger” line of the indicator.
click on the chart to enlarge
Cattle bears are also pointing to the fact that it appears that all of the recent bullish fundamental news in the cash cattle market was factored into prices the first week in March. While there was some cash cattle that did trade last week at $100.00, reports said the bulk of last week’s cash trading activity occurred last Friday at levels up to $3.00 below the century mark. Ideas at present are that cash cattle trade will take place at still-lower price levels this week, amid declining boxed beef prices.
While the cattle bulls are on the near-term technical ropes at present, they can correctly argue that the recent pullback in prices is still just a decent downside price correction in a market that is still overall technically bullish. However, for the bulls to get back into a higher gear they must first fill on the upside last Friday’s downside price gap on the daily bar chart, which means pushing June futures prices back to $95.50. Then, bulls would have to push prices above $97.50 to regain solid upside technical strength.
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