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Thursday, 25 February 2016 16:19 Written by

Technical Analysis PCI : 2016-02-25

The global meat prices reached the local low early in June 2015. Since then the beef lost 30% while pork became 16% cheaper. Does this mean the price disparity between the meat prices? Let’s study the personal composite instrument (PCI) chart of Fcattle/Lhog to look into the matter.

The global pork production will amount to 25.03bn pounds, while beef to 24.58bn pounds in 2016, according to the latest February USDA report “World Agricultural Supply and Demand Estimates”. In 2014 22.84bn of pork and 24.25bn of beef were produced. USDA expects the global pork production to increase with steading beef output. If the beef prices outpace those of pork or decline less, the PCI will grow.

IFC25022016 1

On the daily chart Fcattle/Lhog: D1 is correcting upwards from the year low and has verged the resistance of the downtrend. The Parabolic and MACD indicators have formed the signals to buy. RSI is tilted upwards but has not yet surpassed the level of 50. It has formed the positive divergence. The Bollinger bands are contracting which means lower volatility. The bullish momentum may develop in case the personal composite instrument surpasses the last fractal high and the resistance of the downtrend at 1.046. This level may serve the point of entry. The initial risk-limit may be placed below the last fractal low at 0.97. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 0.97 without reaching the order at 1.046, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Position Buy
Buy stop above 1.046
Stop loss below 0.97

 

Source: http://www.ifcmarkets.com

Read 262 times Last modified on Thursday, 25 February 2016 16:19

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