Despite Bearish Fundamentals, Could Grain Markets See a Short Covering Rally?
Grain markets are higher to start the week and are knocking on the door of some very important technical levels. Could a technical breakout be enough to spark a bigger short covering rally?
Despite Bearish Fundamentals, Could Grain Markets See a Short Covering Rally? (youtube.com)
Live Cattle
Technicals (June-M)
Live cattle gaped higher to start the week, following Friday’s bullish Cattle on Feed report. In yesterday’s report we noted ” If the Bulls can keep the momentum going, we could see an extension towards the 50% retracement (middle of the range) from the recent high to low, that comes in at 178.425.”. This coincidently (or not) was an area where the market started to stall out in yesterday’s trade. If the Bulls are able to chew through this pocket we could see a run back towards the 180 area, which has acted as a bit of an inflection point since the start of the year. On the flipside, a failure to take out yesterday’s high could spark some long liquidation from recent buyers at support. Ultimately, we wouldn’t be surprised to see the market settle into more of a tradable range. If this plays out, it should provide some decent shorter-term opportunities on both sides of the market.
Resistance: 178.45-178.80*, 179.825-180.75
Pivot: 172.90-173.425
Support: 169.00-170.00***
Seasonal Tendencies (June Live Cattle)
Below is a look at historical seasonality’s (updated each Monday) VS today’s prices (black line).
*Past performance is not necessarily indicative of futures results.
Commitment of Traders Snapshot
(updated on Mondays)
Friday’s Commitment of Traders report showed Funds were net sellers of roughly 5.5k contracts. This drops their net long position to 32,301 futures and options contracts. Historically, we would look at this as a neutral position.
Continue reading the full article: Does the Cattle Rally Have Legs? - Blue Line Futures
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