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Hog Futures Technical Analysis - Hog Futures Trading: 2019-12-26
Strong demand bullish for LHOG
Rising Chinese pork imports are bullish for lean hog price. Will the LHOG continue gaining?
Pork demand in China has been supportive of global pork prices as country’s pig herd was decimated by African swine fever. China’s General Administration of Customs reported on Monday China’s imports in November surged more than 150% from a year ago to 229,707 tons, the highest since at least 2016. And pork imports (excluding offal and other non-muscle parts) for the first 11 months of the year rose 58% from a year earlier to 1.733 million tons. Meanwhile China decided tariff rate for frozen pork will be cut to 8% from the most-favored-nation duty of 12%. The measure is aimed at closing a huge supply gap after disease decimated its hog herd. China is the top pork consumer in the world with about 55 million tons of pork consumption last year. Higher import demand is bullish for LHOG.
On the daily timeframe the LHOG: D1 is rising toward the 200-day moving average MA(200).
- The Parabolic indicator gives a buy signal.
- The Donchian channel indicates uptrend: it is narrowing up.
- The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
- The RSI oscillator is rising but has not reached the overbought zone.
We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 72.46. 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 66.48. 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 (66.48) without reaching the order (72.46), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
| Order | Buy |
| Buy stop | Above 72.46 |
| Stop loss | Below 66.48 |
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