Intraday Commodities Analysis: Lean Hogs and Cocoa

Lean Hogs Intraday Strategy

At the beginning of July lean hogs tumbled from 72 to a low of 57.42 before correcting higher to current levels. This has been one of the sharpest drop in lean hogs. Our intraday strategy for the commodity is based on the 4hr chart.

Lean Hogs OCT 16 4hr Chart

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Lean Hogs OCT 21/08/16

Lean Hogs OCT 21/08/16

The most evident technical pattern is reversed Head-And-Shoulders (H&S) that is being painted on the 4hr chart. In addition the 21MA (in black) has crossed the 55MA (in green), which suggest further gains may be seen. However, 62.80 holds a strong resistance levels when analyzing the weekly chart. The price will have to firmly break above 62.80 to affirm further gains in lean hogs, targeting 66.75 initially.

An entry may only be provided once the breakout takes place. Due to the strength of the resistance we suspect the price will re-test the 21MA (in black) before reversing higher to clear above 62.80. Failure to close above 62.80 by the end of the week may reverse the bullish tone of lean hogs in the market and will in fact pave the way for a bearish wave in the commodity, targeting 59.50.

Cocoa Intraday Strategy

Cocoa has posted moderate gains in the market since the beginning of August. We often analyze multiple time frames before presenting our intraday strategies, Cocoa is not an exception.

Cocoa DEC 16 Daily Chart

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Cocoa DEC Daily Chart 21/08/16

Cocoa DEC Daily Chart 21/08/16

Cocoa DEC 16 4hr Chart

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Cocoa DEC 4hr Chart 21/08/16

Cocoa DEC 4hr Chart 21/08/16

The daily chart shows the price is trading within a fairly large range. As tempting as it may seem we do not have a decisive short entry in the commodity.3,050 is the nearest support on the 4hr chart. A 4hr close of 3,050 following a successful re-test is may lift Cocoa above its daily resistance into fresh highs.

We are uncomfortable shorting Cocoa and prefer exercising dip-buying strategies in the commodity. The prior weakness was triggered by the top Head-And-Shoulders (H&S) reversal pattern that took place in mid July. The current weakness may extend towards 3,050 before reversing higher.

If Cocoa breaks below 3,050 (4hr close), further weakness may be seen towards 2,955, which if successfully tested is expected to trigger corrective gains in the commodity. If the price is able to close below 2,955 on the hourly chart Cocoa may re-visit its daily support (lower blue line).

23/08/16 UPDATE: Cocoa initially tested 3,050 but then broke below, which paved the way for further weakness.

Cocoa Daily Chart

Cocoa Daily Chart 22/08/16

Cocoa Daily Chart 22/08/16

23/08/16 UPDATE II: As expected, 62.80 acted as a strong resistance in Lean Hogs.

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Lean Hogs OCT 22/08/16

Lean Hogs OCT 22/08/16

Intraday Commodities Analysis: Lean Hogs and Cocoa

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Intraday Commodities Analysis: Lean Hogs and Cocoa

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Intraday Commodities Analysis: Lean Hogs and Cocoa

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Intraday Commodities Analysis: Lean Hogs and Cocoa

Last Updated on November 20, 2016