Technical Analysis #C-FCATTLE : 2016-10-24

Beef prices advance together with grains

The price of feeder cattle soared last week on steady increase of grain futures prices. Corn, wheat and oats are used to produce mixed cattle feed. Will  Fcattle  continue rising in price?

On the daily chart Fcattle: D1 has slumped almost 1.5 times since start of Q2 2016 having hit a fresh 6-year low and are now struggling for growth. Their further increase is possible in case of higher beef prices.

• Parabolic is giving bullisg signals.
• Bollinger bands have widened which means higher volatility.
• RSI is below 50. It has formed positive divergence.
• MACD is giving bullish signals.

The bullish momentum may develop in case the Fcattle surpasses the resistance of the downtrend at 124.6. This level may serve the point of entry. The initial stop-loss may be placed below the Parabolic signal and the last fractal low and 6-year low at 115.6. 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 breakeven 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 115.6 without reaching the order at 124.6, we recommend cancelling the position: the market sustains internal changes which were not taken into account.