Back on March 1 I wrote about the charts warning of higher beef prices possibly throwing a monkey wrench into your summer BBQ plans. At the time the cattle sub-index was trading at $65 I wrote …
Interestingly, a break and hold above the (blue horizontal) neckline will be technical confirmation the pattern is in play and the upside target is right back where it was at my original post in 2015, $80.
Here we are 4 and half months later and the upside target was reached as you can see in my chart below. With the upside target met, I would consider banking partial or complete profit on this trade. As you can see, it is forming negative momentum divergence which, once confirmed, warns of weakness ahead. We have to be open to the idea that a break and hold above the 80 level provides ample argument another push higher is probable, creating a possible second divergent high. If that were to occur and I did not take profit on the entire position, I would highly suggest doing so.
Those that followed along, congratulations. Cattle seems to be an excellent market that tends to follow its technical set-ups. As such, I would expect cattle to provide another opportunity on the downside, once this current move has exhausted itself. But until that happens you may want to look for a cheaper protein source for your 4th of July party. Chicken anyone?