Technical Analysis #C-LHOG : 2019-06-24

[IFC Markets]

Lower pig demand bearish for LHOG
US exports of pork to Mexico is declining. Will the [URL deleted] LHOG continue sliding?

US exports of pork to Mexico were 232,392 metric tons in the first four months of 2019, 18% down compared to the same time period a year ago, according to the US Department of Agriculture. Lower export demand is bearish for pork prices. At the same time the flooding in Midwest is expected to negatively impact corn and soybean crops, which are main feed for pigs. And tighter feed supply is an upside risk for hog prices.

On the daily timeframe the LHOG: D1 is falling toward the 200-day moving average MA(200).

• The Parabolic indicator gives a sell signal.
• The Donchian channel indicates downtrend: it is widening down.
• The [URL deleted] MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
• The [URL deleted] RSI oscillator is falling but has not breached into the oversold zone.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 76.65. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 86.06. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (86.06) without reaching the order (76.65), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Order Sell
Sell stop Below 76.65
Stop loss Above 86.06