Cattle hedge alert today
Chart breakdowns below audio*
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CHART BREAKDOWNS
Jan Feeders 🐮
We had a cattle hedge alert today. Following our last hedge alert near the October highs. I like managing some additional risk up here. Especially if you missed our October alert or didn’t manage risk near those highs.
This correction bounced right off the golden zone to the downside. Right where we needed to hold.
Now we are sitting in the golden zone to the upside. Which has been the point of interest I’ve been discussing.
As we’ve clawed back 50-61.8% of the entire sell off.
If this is just a dead cat bounce, this would be a very common area for the rally to stall. So I am taking some caution here.
No, this does not mean cattle “has” to go lower from here. This is just simply an area where relief bounces often struggle. So that warrants caution following a nice bounce.
Dec Live 🐮
We’ve been underperforming feeders.
Just like we did on the previous rally, where live cattle failed a set of fibs lower than feeders did on the last run.
Now we are a set of retracements lower this time again as well.
Feeders are in the golden zone (50-61.8%). Meanwhile, live cattle is in the 38.2-50% zone.
We also left a pretty ugly candle today. Closing way off the highs, ending lower on the day.
Dec Corn 🌽
We held right where needed to.
We still have bullish divergence on the RSI. So prices could theoretically print new lows, and I assume this RSI would not. Meaning we would still have bullish divergence even if we did make new lows.
We also just had the MACD cross bullish. Every single time it has done so this year, a decent bounce or rally has followed.
Both are positive signs for corn.
Obviously, it’s disappointing that we failed to follow up the USDA report day with any follow-through strength.
But the indicators are still giving us friendly signs. Whether the bottom is in or not, the indicators hint that it should be close, if not already in.
If we zoom in here and look at the 4 hour chart.
We had a clear downward channel we had been trapped in.
We have since broke out.
The clear level we need to break above to spark further upside is going to be those recent highs around that $4.55 area.
If you can do that, I would probably be safe to say we are ready for the next leg higher.
Jan Soybeans 🌱
We bounced right off those August lows.
The next upside point of interest we are going to watch for is still going to be the golden zone up to the Sep highs. Which also happens to be right at those highs from July. That zone will often tell us whether this is just a relief rally or the start of the next real leg higher.
We did see the RSI break out, and the MACD crossed bullish for the first time since the August rally. Both are positive signs.
If we zoom in on the 4 hour chart.
We do not have to get there, but level we want to hold is the golden zone down to those recent lows.
My bias is higher unless we break below that. As breaking that would be a possible warning sign. Currently, we have almost hit the 38.2% level which is the first retracement.
To the upside, those recent highs failed at some resistance. So breaking above those highs should open the door to a leg higher.
Dec KC Wheat 🌾
We printed another round of new lows today.
We are now below those summer lows.
However, we do still have bullish divergence on the RSI for now. Very similar to what we saw in June.
The MACD also just crossed bullish. Suggesting mometum is trying to turn around.
Let’s zoom in on the 4 hour chart.
For actual confirmation the bottom is in, we’d like to break above this downward channel that we’ve been trapped in the entire sell off.
But again, look at that clear bullish divergence that has been building up.
Prices continue to grind lower. The RSI is making higher highs.
Signs of a possible bottom, but we need to break this downtrend to get excited.
So basically this divergence looks like wheat is brewing for a rally, but need some sort of confirmation that we’re done going down.
Dec Chicago Wheat 🌾
Pretty clear bullish divergence in Chicago as well.
Again, does look pretty similar to what we saw in June.
So potentially a friendly sign.
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