This is a follow up and recount of the cattle market, specifically live cattle. Zooming in from the weekly to the April Live Cattle daily chart, we see that the market has completed a midpoint gap objective to the upside.
This means that the current up leg began at a certain point, rallied, then gapped up and completed the leg. The distance from the bottom of the leg to the gap roughly equals the distance from the gap to the top.
You will see what I am saying on the April live cattle daily chart. Also, the highest bar was a spike up and down Doji-like bar, indicating a climax or a top - the buyers ran out of energy. After the high, cattle marked a lower high 4 days later. This pattern looks like a spike and ledge top. Here is April live cattle first.
Therefore, we have more evidence that the cattle market could be topping out on the weekly and daily charts, offering a low risk hedging opportunity for cattlemen. Remember, the weekly chart has also achieved an upside target plus making a double top on the weekly from 2014 to now.
Live cattle has rallied about $92 since 2020. Over the last 9 years, cattle has traded in $95 range and is currently trading in the top 2.3% of that range. Here is the weekly live cattle chart again.
On Friday, May Corn hit the top of the most recent downtrend line from last summer's high on the low for the day, on the continuation chart. Also, corn closed in the upper third of the bar, indicating that the buyers were strong and overwhelmed the sellers and rejected that low price.
Also, we have 3 legs (down-up-down) in the most recent down correction on the intraday charts, so this correction could be complete - I am leaning this way. The red arrow is pointing to Friday's bar - notice how corn touched the line on the low of the bar.
Notice how the May Corn price almost touched the downtrend line, but the buyers front ran this support before price could get there. Frontrunning occurs when the traders buy or sell (stop the current move) before price reaches a support or resistance level, leaving some participants on the sidelines.
A reminder about how market moves are constructed - you get 5 legs/waves moving with the trend and 3 going against (correction). This is a universal chart rule. Here is the 4 hour May Corn showing this recent 3 legged correction and the uptrend line.
I will cover soybeans, wheat and crude on tomorrow's report.