Lean Hogs Analysis: Lower pig supply in China bullish for Lean Hogs23rd November 2018
Lower pig supply in China bullish for LHOG
Spread of African swine fever in China negatively affects supply of pigs in the world’s largest pork consumption market. Will the LHOG continue rising?
The African swine fever is still a problem in China after the first reported case in August in Liaoning province. The disease then spread to several other provinces. Last Saturday new cases were reported in four regions including Shanghai, Jiangxi, Yunnan and Sichuan, according to the Ministry of Agriculture and Rural Affairs. China is the top pork consumer in the world with about 55 million tons of pork consumption last year. As the number of infected farms increases quarantine restrictions on pig transportation and trade negatively affect the supply of pigs available for slaughter, pushing up prices. Lower pig supply is bullish for LHOG.
On the daily timeframe the #C-LHOG has breached above the 200-day moving average MA(200) and is testing it.
- The Parabolic indicator gives a buy signal.
- The Donchian channel indicates no trend yet: it is flat.
- The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
- The Stochastic oscillator is falling after breaching into the overbought zone.
We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 66.487. 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 56.606. 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 (56.606) without reaching the order (66.487), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
|Buy stop||Above 66.487|
|Stop loss||Below 56.606|
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