The most recent ascent in live cattle that helped lift cattle near record highs started in mid-November. Within that timeframe April futures have appreciated 7.5%. This past week, futures stalled just below record highs and are finding mild support at their 9 day MA, identified by the light blue line. A settlement below this level would confirm an interim top. Big picture, the same tight supplies that have lifted prices to these levels still exist but technically it would appear we get a correction before a new high is reached. Shorter term, the inclement weather has effected the demand in recent weeks and with another polar vortex on its way in the coming weeks it again could serve as a demand drag.
With funds holding a record net long position and poor weather anticipated in the immediate future, to me there appears to be a likelihood of at least a short term correction. When the boat is tilted so much in one direction, as a contrarian I generally try to get my clients leaning in the other direction.
From a trading perspective, use the Fibonacci levels in the chart to guide you. I drew a red horizontal line near $139 for my first objective.
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