Live Cattle Hover Near Contract Low

live_cattleDec092009.gifclick on the chart to enlarge
February live cattle futures on the Chicago Mercantile Exchange last week hit a fresh contract low of $82.75. Prices then saw a tepid short-covering bounce, only to back off again and presently hover near the contract low. Prices are presently in a six-week-old downtrend on the daily bar chart. A close below solid technical support at $82.75 in February live cattle would produce more chart damage to suggest another leg down in prices in the near term. The downside technical objective for the bears would then be pushing and closing prices below strong chart support at the $80.00 level.
For the cattle market bulls to begin to regain fresh upside technical momentum to suggest that a market bottom is in place, they will have to push and close February futures prices above strong technical resistance at the October low of $84.25. Below that level does lie chart resistance at $83.55, at this week’s high of $83.85 and then at $84.00. My bias is that the cattle futures market is close to marking a market bottom, from a time perspective, but a fresh spike lower cannot be ruled out. Stay tuned! Jim Wyckoff

Reblog this post [with Zemanta]