Live Cattle futures have formed a very well-defined Head & Shoulders chart pattern, illustrated here on the 240-minute time frame. The chart has been developing this pattern since late June and provides support and resistance levels for the wide range in which this market has been trading.
Wednesday's session carried the futures back up to the edge of resistance provided by the pattern near $113.80 per hundredweight. The price appears to be rolling over at this level, suggesting a reversal of the recent uptrend with a move back to the support at the $108.00 level.
A move above the neckline at $113.80 would initiate a technical breakout to the upside, which could have considerable room for upside gains given the duration of this Head & Shoulders formation, and traders will be watching for any buying strength coming into the market this week for setting up a possible rally. However, given overall weakness in the commodities complex on top of the current pause at resistance, expectations remain for a downward correction inside the range.
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