I had a request come in for a look at the major (long-term) trend on the continuous monthly live cattle chart. What’s interesting about this particular chart is it shows a solid downtrend from the high of $171.65 (November 2014) through the low of $94.30 (October 2016). However, after a quick spike to a high of $137.00 (April 2017) the live cattle market has posted a series of lower highs and lower lows, creating a clear downward channel over time, and the very definition of a major downtrend. That’s not to say we haven’t seen some impressive rallies, with the ongoing move from the low of $81.45 (April 2020) through the this past February’s high of $121.75. The month of March saw the futures market consolidate within the February range of $121.75 to $114.725, closing higher for the month at $120.975 and keeping monthly stochastics well above the overbought level of 80%. A few interesting patterns can all be seen:
- Selloffs tend to last just over 4 months, on average.
- Rallies run anywhere from 4 months to the most recent 10 months, if February 2021 proves to be the high.
- Trendline resistance during April is roughly $123.325.
We need to keep in mind the April contract will expire at the end of April and the April-June spread remains at a an extremely bearish (-$2.525) as of Thursday’s close.