Lean Hogs See Powerful Upside “Breakout”

August lean hog futures at the Chicago Mercantile Exchange have recently seen a powerful upside “breakout” from a trading range at higher levels. The past two weeks have seen futures prices push well above what was very strong technical resistance just above the $67.00. On Tuesday August hogs soared to a fresh contract high of $72.00. The next upside price objective for the bulls is longer-term technical resistance at the $75.00 level.

The bears can argue that from a shorter-term technical perspective, August lean hogs are overbought, at present. The 14-period Relative Strength Index was reading 73.32 at the close Tuesday. Any RSI reading above 70.00 does suggest a market that is overdone on the upside and due for at least a corrective pullback soon. Slow stochastics readings are also well into overbought territory, with both the %D and %K lines above 90.00. Any slow stochastics line readings above 80.00 suggest a market that is overdone on the upside.
Click on the chart to enlarge

Technical support for August lean hogs is located at 71.00 and then at 70.00 cents. It would take a close below what is now solid near-term technical support at 67.00 cents to provide the bears with some good downside technical momentum. From a longer-term technical perspective, if nearby lean hog futures can continue to push strongly higher, there is a strong resistance zone located at 82.70 to 86.60 cents.
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