Live Cattle futures slipped from near-record highs in Friday's session to signal a technical breakout to the downside. Autochartist has been following the development of a longstanding Triangle chart pattern, with the sell-off completing near the apex of the formation. This leaves the market vulnerable to a sharp sell-off to begin next week's trading.
The Triangle chart pattern is illustrated here on the 240-minute time frame and shows the recent failure to penetrate upside resistance. As this high also failed to exceed the previous high near $126.20 per hundredweight, there is a potential that this breakout will confirm and leave that as a major top for the market.
The projected price target for the near term is a move down to the $122.20 per hundredweight price, with the lower end of the forecast seen as low as $119.20 if the strong downside momentum continues. A move back above resistance at $125.70 would be needed to negate the sell signal, a move which would signal Friday's slide as a false breakout if it does materialize. The narrow range of the triangle at the breakout point allows for a low-risk stop-loss on new short positions entered here.
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