Learn To Trade Futures | Commodities Futures Trading Course

Archive for January, 2009

Yesterday Live Cattle made a 5 day low at 82.275 which usually means a turnaround a reversal on prices is eminent. For every action there is a reaction.

Understanding that and knowing how markets turn on a dime when new highs or lows are set, Feb. Live Cattle did exactly that. During the trading day yesterday, cattle moved as high as 83.275 which is a 100 point move or $400 dollars per contract.

Overnight, the market retraced as all markets do when an exceptional reversal happens, but can sometimes indicate that there may be a continuation of that move sometime in the near future.

That time looks to be approaching in the upcoming day session, as prices are now trading between 83.85 – 84.075. Still off the highs that it made yesterday, but within striking range to place the short term bulls in advantage here.

Key resistance areas to watch are going to be 84.05 and 84.30. Although the 84.05 has been broken, I’d like to see a price hold for at least 2-3 trading bars intraday.

Depending on what time frame you watch (I use a 10 min.) that could be between 20-60 minutes for that price to first be penetrated and then held (meaning the prices do not go lower than that) for at least that time frame.

Moving through the next resistance areas does help, but both will need to hold.

After 84.30, look for next resistance zones to be 84.50 – 84.65 and then 85.00.

Support areas lie at 83.70 – 83.85, 83.50, 83.20.

The importance of these resistance and support zones are areas which you should target as potential stop loss orders and profit targets.

As the market either holds or moves past these price zones, one can further assess that the zones are either strengthened or violated which could lead to an early signal of price direction.

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