Live cattle should have an excellent buying opportunity in the coming weeks. Although there are multiple wave counts for Daily October futures, the weekly chart (below) shows a clear, 5-wave move (i–v) off the low established in early April.
Having an initial 5-wave move off the low has significant meaning. Because corrections never occur in 5 waves, we can expect further rally after a pullback in wave C or in a wave 3 (more bullish scenario). It should be noted that due to the fractal nature of the wave principle, you can get 5 subwaves in a correction, but that would be only part of the correction and further movement would occur as the other waves of larger degree play out.
Below is the primary interpretation of the daily chart. Although you could make the argument that wave 1 or A terminated on July 16th at 107.22, it is more likely that we see higher prices to complete the initial 5-wave move.
The substructure can be seen on the hourly chart below.
Using other traditional technical analysis indicators to corroborate or refute the wave count.
In the chart below, long-term moving averages are sloped higher. Purchase points on pullbacks can be when prices retrace back to the long-term MA’s that are positively sloped, if it corroborates what is seen on a wave count forecast.
You can see below that prices have pushed the upper boundary line of the Donchian Channel higher – a good sign for bulls. Prices should see support from the midpoint of the Donchian Channel if the trend is indeed higher.
Monday’s candle is a bearish engulfing pattern. This calls for lower prices the rest of the week. If that occurs, it would like up with what we forecasting on the hourly chart. Looking for minor moves lower the next few days, then wave (v) of v of 1 or A should commence.
RSI has spent a couple of weeks above the 60 level. This gives a lot of confidence that the bottom obtained in early April will be the bottom for some time and price retracements will be buying opportunities. Look for the 40 level to hold in RSI on any pullbacks to confirm the uptrend. Stochastics are in overbought territory, but that condition can last for some time.
What does this mean for a Live Cattle Buyer?
Overall, the long-term trend appears to have changed to higher. The 50-62% retracement in the coming weeks/months should be an excellent purchasing opportunity for buyers to extend coverage.