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Sea Legs: February Live Cattle


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February Live Cattle

The February Live cattle futures managed a modest recovery in today's action. Early week lows came in around the .382 retracement of the entire move and the .786 from the inner fourth wave extreme. This was touched upon in yesterday's post. Also of note was the momentum divergence apparent in the smaller time-frame price charts. All of this coming together produced what appears to be a minor 5 wave structured rally. This move to me would need to be categorized as an (a) wave or a (i) wave of a larger sequence. I am favoring the (a) wave labeling. This would put me on the lookout for a minor (b) wave retracement which in turn would give way to a (c) wave advance to complete the structure. Normal projections suggest a 1 x 1 to 1.618 to 1 relationship to the (a) advance. Pullback approximations fall between .618 and .786 from the 124.875 high. Mid range level puts the number at +/-123.250 which coincides with today's open. If this were to play out I'd be suggesting a modest long position with a stop loss under the most recent low equating to a .60 stop risk. Projecting the extension targets from the low of pullback which fell into this target zone would produce an upside projection zone between 125.5 to 126.8 +/-. Cross zone resistance rests at +/-126.300. I'd be targeting this location. This equates to a favorable 5 to 1 risk reward. Obviously a few things have to fall into place. This is all a process in planning the trade and trading the plan.

My analytical breakdown focuses on a blend of wave pattern recognition, long and short term geometrical extensions and momentum signal interpretation. Please feel free to contact me at Walsh Trading to discuss this and other proposed strategies.

Please join me next Tuesday as I apply Wave Theory and Geometric targets levels to this and other commodity markets.

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John Lunney

Senior Technical Analyst

Walsh Trading

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Walsh Trading

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About the author


John Lunney began his trading career in 1989 as a clerk for IFO, the largest futures and futures options brokerage on the CME floor. Within one year, John was promoted to an executing floor broker responsible for handling large individual and institutional accounts. John’s knowledge of option theory and tactics quickly attracted a growing customer base. In 2000, John began exclusively trading futures and futures options for his own account. John later became a founding member of VI Capital, a proprietary trading company funded with personal and investor funds. At VI Capital, John was the director of risk management, technical analysis and strategy development. VI Capital realized multi digit returns over the course of 8 years of trading.

John has extensive trading experience in stock indexes, metals, commodities, energy and agriculture products. He believes that hard work reveals the best trading opportunities, and strong discipline creates consistent results. John possesses a unique ability to connect with customers, understand their goals, and work with them to create long and profitable relationships.

Contact John
Phone: 312-957-8108 or 888-391-7894
Email: jlunney@walshtrading.com

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