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Lean Hogs - Price Breakout by TrendFollower

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Lean Hogs in March 2019 has seen its price jump considerably. This particular commodity is prone to such price moves. It tends to see swings both on the long and short side. 

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Commodities offer excellent trend trading opportunities. Here a substantial breakout has been identified. What happens next in terms of price action will be interesting. 

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The question which presents itself here is whether there will be any upward trend continuation after this pullback?

Another question is whether there any fundamentals and supply / demand issues which are supporting this price action? Normally when there are then it makes any trend stronger. When there isn't then the trend has a weaker foundation. 

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I am going to show the chart for Lean Hogs which it is trading above its 20, 50, 100 and 200 DMA on the 'daily'. Another key factor is that the moving average curves are all sloping upwards which is bullish as the chart below will show. 


So what is the reason for the spike. When technical analysis meets fundamental analysis and the reason for the price action is known and is a strong driver then the trends seem to also be strong. Now demand from China is increasing due to African swine fever which is contagious. Now it is reported that China is the largest consumer in the world for Pork. It produces and consumers over half of all the Pork in the world. It seems this increased demand from China is pushing up US prices. 

Now when one begins to understand why the price is bullish and trending upwards and can link the fundamental supply and demand picture with the technical narrative then one is presented with a strong trading opportunity. 

Now based on my previous threads and posts of identifying trend commodities I expect an IG Analyst to post something in relation to Lean Hogs shortly. They normally do so after I have identified the trending opportunity to the IG Community. LOL. 🤣😂

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U.S. Department of Agriculture export sales numbers for Lean Hogs released on Thursday were very interesting. The USDA pegged net U.S. pork sales at 90,700 metric tons for the March 29 to April 4 period, with China buying 77,700 metric tons.

Using Supply and Demand information, the fundamentals for Lean Hogs with clear support from the price action delivers a strong and bullish trend. How long this will continue no one knows but 'Trend Identification' is a key part of any trend following strategy and this is where a lot of traders who follow trend following principles miss the big returns because they stick to familiar assets. It is not the asset which is important but the trend and price action in my personal opinion. 

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Lean Hogs to me is yet another Commodity showing the potential for a shorting opportunity right now. It seems Commodities are being battered right now as there are more shorting opportunities than there are going long right now for assets in this specific asset class. 

I include the chart below to illustrate the potential shorting opportunity for Lean Hogs.


This one is slightly more higher risk to short as it could be a correction before another resumption to the upside. Right now the price has gone below its 20 and 50 DMA but the price still remains above its 100 and 200 DMA suggesting the longer term upward trend is in tact for now. How long no one knows but the chart below highlights this point.


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Lean Hogs still presents a shorting opportunity if you are not already short. 


The Parabolic SAR is indicating a bearish trend potentially manifesting itself as shown below.


Identifying trends and breakouts both to the 'Long' or 'Short' side is key to maximising any potential profits. 

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