This post is a follow up from our July 30th post, “Live Cattle Technicals”.
The cattle market’s waves have played out nicely to our forecast. Look for further downside in wave 5 of 5 of I. That being said, this should be the last wave down of the sequence. And when many are calling for 80¢, it will probably be the time to start accumulating long positions in the market. Confidence can be gained if there is divergence in momentum and price, although the cattle market has the personality of the stock market that exhibits spike bottoms making it difficult to find divergence.
An hourly chart shows nice subdivisions that adhere to many of the guidelines of Elliott Wave.
Expectations are for October futures to target 95.80, where wave 5 = wave 1. At that point, other market indicators will suggest on how aggressive to be in accumulating long positions.
To add confidence to buying as the market drops, the charts below show that current price levels are in the lowest 5% of the last 1 and 5 year periods. Also, 98% of the volume in the past year has traded at levels higher than current levels. If the market adheres to our forecast, these percentages will look even better.
