In December we wrote that lean hog futures on the Chicago Mercantile Exchange had based and were due a rally; and rally they did to the delight of many pig farmers, though that was admittedly from fairly depressed levels. They are now back close to their ultra-long-term mean regression at 76 US cents per pound (in weight), becoming overbought due to last fortnight’s rally. While all aspects of the Ichimoku cloud charting system remain bullish, we feel that another bout of consolidation between 74 and 80 US cents is likely. Probably taking a similar shape, but shorter length, to triangle consolidation in December and January, this would see current very strong bullish momentum ease. Later this year expect a third leg up to 87.25 US cents.

Nicole Elliott is a technical analyst