Technical Analysis #C-LHOG : 2018-09-10

[IFC Markets]

Lower Chinese pig supply bullish for LHOG
Spread of African swine fever in China negatively affects supply of pigs in the world’s largest pork consumption market. Will the LHOG continue rising?

The African swine fever is spreading rapidly in China. As the number of infected farms increases quarantine restrictions on pig transportation and trade negatively affect the supply of pigs available for slaughter, pushing up prices. China imported about 2.3 million tons of pork and pork products last year, according to Chinese customs data, out of total consumption of about 55 million tons. The UN Food and Agriculture Organization said on Friday the African wine fever in China is “here to stay”, adding that it was almost certain to spread to other Asian countries. Lower pig supply is bullish for LHOG.

On the daily timeframe the LHOG: D1 has breached above the resistance line.

• The Parabolic indicator gives a buy signal.
• The Donchian channel indicates uptrend: it is widening up.
• The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
• The Stochastic oscillator has breached into the overbought zone, this is bearish.

We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 55.764. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below the lower Donchian boundary at 50.109. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (50.109) without reaching the order (55.764), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Position Buy
Buy stop Above 55.764
Stop loss Below 50.109