We are going to be looking at April Live Cattle. So let’s dive in and get this clock rolling!
Matthew Bresnahan, Market Strategist
Good afternoon, traders, and Happy New Year. This is Matthew Bresnahan with Blue Line Futures coming to you from the Chicago Board of Trade with today’s edition of the two minute drill, where we will be taking a deep dive looking at April live cattle. So let’s get this clock rolling. Okay, so what usually pairs great with a nice juicy steak is a chopped salad, which is precisely what we’ve gotten pretty much over the last three weeks.
We’ve been flirting with the 23.6% retracement at one 7352 between the September 15th high and December 6th low here. Basically since, you know, right here, December 18th, right now, we are still kind of caught in no man’s land in terms of the RSI, basically just right in the middle of the road. But the encouraging aspect is that it continues to move higher.
However, if we look at the average directional movement indicator, which or the average directional movement line that has since moved lower now average directional movement basically serves as a proxy for the strength of the market’s trend. Now, if we are going to see an upside breakout, you know, where we ultimately test one 7855 or the 38.2% retracement of the recent high and low here, we are going to need a handful of things to happen.
First, we are going to need to see positive directional movement, which is this green line here overtake the red line, which represents negative directional movement and positive directional movement. Basically says, you know, this is how much the market moved up in a given day, you know, relatively speaking. The other thing or the next thing that we are going to need to see is the directional movement indicator start turning higher here.
Now, if it bottoms out or, you know, starts kind of tilting higher, that would be just as sufficient. But third thing we will need is that the RSI will continue to move closer to overbought territory, sloping higher, making new highs each step of the way. As you know, price makes new highs. And lastly, and arguably most importantly, we’re going to need bulls to reenter the market.
You know, in order for all of these things to exist or to come to fruition. You know, money flow has to be the catalyst behind it. And if we look at where money flow has gone, you know, we’ve basically had a wash out since the, you know, the highs that we had in the fall. And, you know, there is a modicum of fear, you know, coming back to the market after it had basically fallen out of bed over the last three and a half, you know, months for the better part.
Now, if we look at seasonality, you know, there is some hope. You know, today here in this this red line here represents, you know, today’s date, which is January 5th, all the way to March 22nd, where April feeder cattle typically does move higher on five, ten, 15 and 20 year intervals. So let’s hold out some hope and let’s look for higher prices in April.
Live cattle. And if we see concurrence in each of these factors, we will likely see that come to fruition. Well, thank you. We did run a little bit over here on the two minute drill, but thank you for watching and give us a like and subscribe.