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.
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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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