October live cattle futures at the Chicago Mercantile Exchange on Wednesday poked to a fresh four-week low of $86.15. Price action this week, including Monday’s gap-lower trade on the daily bar chart, could have been the early stages of a bearish downside “breakout” from a bearish pennant pattern that had formed the past couple weeks. However, the strong rebound in prices Wednesday, on fresh speculative fund buying and short covering, negated that potentially bullish chart pattern and did revive the bulls.
Prices scored a bullish “outside day” up on the daily chart Wednesday.
click on the chart to enlarge
There is solid near-term technical support located at $85.20, which is the next major near-term downside price objective for the bears. On the upside, bulls would need to fill last week’s downside price gap on the daily bar chart–meaning a push in October futures prices above $89.10–to gain better upside technical momentum to suggest a fresh leg up in prices. That would also fill the downside price gap that created the bearish island top reversal pattern on the daily bar chart.
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