#C-FCATTLE: Forex Technical Analysis September 10, 2015

By IFCMarkets

Will demand on beef last even after the US “picnic season”?

The cattle meat price can go up due to the increasing import to the US. Moreover, Indonesia announced its intention to increase the purchases on the global market in September over the planned 8,000 units. The beef quotes are struggling for reversing upward. For how long will it last?

The beef import to the US has surged by 9.7% and totaled 228 mln. pounds. It is growing for 17 consecutive months. The beef export to the US contracted by 12.7% to 200 mln. pounds in 10 consecutive months. Thus, the net import has totaled 88 mln. pounds a month while the beef price has lost 8% since the start of the year. October 7 the public holiday Labor Day was celebrated in the US. Some of the market participants anticipated the contracted demand on beef after the holiday due to the end of the “picnic season” but that did not happen. There was such an active trade on Tuesday that CME has increased its price range for the prompt-month beef futures. Investors assume the possibility that the forced closure of the shorts could have taken place. Let’s consider the possible continued uptrend of the Feeder Cattle CFDs.

On the daily chart, the FCATTLE:D1 was close to the annual low, failed to break through this level and is now rebounding. On Tuesday it broke the triangle up. The price is below the 200-day moving average. The MACD and Parabolic indicators demonstrate the buy signals. The RSI is neutral and below 50. The Bollinger Bands have widened a lot which can indicate higher volatility. The bullish trend can develop subject to the beef quotes surpassing the last upper fractal of 203.9. This level may serve the point of entry. The initial risk limit shall be placed below the Parabolic signal and the lower fractal of 195.9. Having opened the delayed order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals every 4 hours. By doing this we adjust the potential profit/loss ratio in our favour. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level of 195.9 without reaching the order of 203.9, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Market Analysis provided by IFCMarkets