After last week's selloff in the Live Cattle complex I thought we would take a look and see what that market could have in store as we move forward.  I have included two daily charts on the December contract, the first with a basic Fibonacci retracement of the current break we are in and the second chart shows a reverse Fibonacci extension.  Both charts have descending trend lines that start from different points. 

Chart 1:

In chart 1 let's look at where the market is currently trading and what could happen in the near term.  I want to look specifically at the top trend line that when broken in the middle of Oct the market rallied to $87.90, which was almost a .618% retracement of the break that started on July 28.  The market has now traded down and tested the extension of this once bearish trend line at roughly $82.80.  The market should now correct up into another Fibonacci resistance level between $84.07 at a minimum, but most likely a correction back to a .382% level at $84.32.  Once this is complete the market should then resume its downtrend to new lows which I will cover in chart 2. The market should not go back over $85.27 in the near term, or we will have to come back a revaluate the market going forward.

Chart 2:

In chart 2 maybe we can identify an ending point for this nearly $5.00 decline that has been working for the last three weeks.  Starting with the two trend lines on the chart, if you extend them out in time they come close to merging together towards the end of November or the first week of December at a value near $81.50.  If you include the Reverse Fibonacci to the chart and look down at a very common extension of 1.382, which value is $81.82 you can see that numerous indicators point to an area that will at the least will be very good support. 

Brock Thompson Trading, 2525 Lakeview Dr. Amarillo, TX 79109, brock@brockthompsontrading.com (806)-350-2400

Make note that intra-day support and resistance prices change throughout the day, so if you have any questions during market hours please give me a call for an update.    

These forecasts are solely the opinion of the author and make no representation as to how the market will actually trade.  There is substantial risk of loss in trading futures and options; therefore you should carefully consider whether trading is appropriate for you in the light of your financial situation.  This is not a solicitation to buy or sell futures contracts.