Feeder Cattle Situation

Continuous Feeder Cattle chart shows how the price has reached the first major support after two limit down days:

I have marked on the chart two turnaround figures:

1- 123 pattern confirmed by passing 2.

2- A possible head and shoulders formation.

To draw the two years graph, I have selected a cutoff between the last contracts of 20 days. Thus, we see how the contract within 20 days to reach maturity is overlapped by the next maturity contract.

This type of chart with different colors in maturities is useful to analyze the seasonality of each contract in different years.

After the two limit down days commented, the spread Feeder Cattle FH5 where I'm short has not moved. The explanation of this horizontal movement in the spread is the difference between the two contracts remains the same, having dropped the two maturities the same points (two-day limit down = 6 points).

I have noted with a red arrow, the point of my short entry in the spread and the take profit target area with the red rectangle.

You can keep track of the operation in my Spanish blog: Spread Feeder Cattle FH5 (2)

Both charts were prepared with Scarr Visual Trading