This article is originally referred from IFC Markets Technical Analysis
US Labour Day is celebrated on first Monday of September. For this reason market participants expect higher demand for porkВ связи с этим участники рынка ожидают увеличения спроса на свинину. USDA forecasts hog slaughter to rise by 8.5% next week compared to the previous one to historical high for this time of the year of 2.3mln head. Will lean hog prices advance?
Next week demand on lean hog may reach the historical high of US weekly slaughter of 2.5mln head hit in late December 2015. Americans prepare lean hog for barbeque on Labour Day. Another factor of price growth is USDA report that US pork exports rose last week to 17.4 thousand tonnes, the 6-week high. Higher exports are caused by improved pork demand in Japan. Meanwhile, beef prices reached a 3-month high on Tuesday and pork may follow its steps. Its price slumped by third in 2 months together with grains futures as grains are used in mixed pig feed production.
On the daily chart Lhog: D1 tumbled without retracements. In recent days the downward movement stalled. The MACD and Parabolic indicators have formed signals to buy. The Bollinger bands have widened a lot which means extremely high volatility. RSI has been in oversold zone for a while having formed positive divergence. The bullish momentum may develop in case the pork prices surpass the three upper Parabolic signals and the Thursday high of 61.3. This level may serve the point of entry. The initial risk limit is possible below the two last Parabolic lows and the fractal low at 57.
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 57 without reaching the order at 61.3, we recommend cancelling the position: the market sustains internal changes which were not taken into account.
|Buy stop||above 61.3|
|Stop loss||below 57|
Original Source: IFC Markets Technical Analysis