The weekly cattle chart has been building a major base for nearly one year. The recent low at 82 correlated with a spike in volume that suggests ownership shifted from weak hands to stronger hands. Unless this low is taken out, the stronger holders of futures will be in a fiscal position to begin adding to positions and driving the trend of the market. The head and shoulders formation has a distinct pattern that upon a weekly close above neckline, will project a move towards 96.65. Traders wanting to enter this market should do so on a test of support at 84-82 or on a close above the neckline.
Rich Nelson is Director of Research for Allendale Inc. He can be reached at firstname.lastname@example.org.