Livestock rises less on hot weather.
This article is originally referred from IFC Markets Technical Analysis.
Beef prices stopped falling. Market participants worry the spell of hot weather in US may limit increase in feeder cattle and reduce meat production. Will beef prices advance?
USDA released on Monday its monthly outlook “Livestock, Dairy, & Poultry Outlook” according to which US beef exports rose in May 2016 by 14% compared to May 2015. This mainly happened on higher supplies to Japan (+29%), Mexico (+39%) and Southern Korea (+61%). USDA expects beef exports from US to rise by 9% to 2.5bn pounds by the end of this year compared to previous year. In theory, higher demand for meat may support beef prices.
On the daily chart FCATTLE: D1 shows sluggish growth having hit a fresh 3-year low last month. The MACD and Parabolic has not reversed up yet and are still giving signals to sell. But the Bollinger bands have narrowed so much that strong price movements are possible amid extremely low volatility.
RSI is being above 50. Previously it has formed positive divergence which has not developed yet in our opinion. The bullish momentum may develop in case the beef prices surpass the last fractal high, the Bollinger band and the Parabolic signal at 146. This level may serve the point of entry.
The initial stop-loss may be placed below the 3-year low at 134. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the break-even point.
The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade.
If the price meets the stop-loss level at 134 without reaching the order at 146, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
|Buy stop||above 146|
|Stop loss||below 134|
This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.
Original Source: IFC Markets Technical Analysis