HighGround Dairy Monthly Technical Commentary

CME Class III Milk Futures The weekly price trend for Class III Milk points down from its August 2011 high, and the latest breakdown below support at 17.50 keeps the bears in control. Meanwhile, an advance and daily close back above 18.34 might suggest that the intermediate downside move has run its course. The weekly trend maintains its negative slant until price Class III Milk can overtake downtrend line resistance at 18.60, and ultimately the July high of 19.12. Close-in support for Class III Milk stands at the August low of 17.27, then the Jan/Fed 2013 low range of 16.85 down to 16.55. One way to approach Class III Milk is to let the near term strength play out, taking prices back toward downtrend line resistance. Watch for negative technical signs, such as an outside day reversal, to initiate short positions. CME Class IV Milk Futures The month of August saw Class IV Milk challenge its September 2012 high of 20.00, which thwarted the advance. Meanwhile, price action over the last 13 months carved out an ascending triangle pattern, highlighted by deliberate and symmetrical moves toward resistance. Confirmation of a move above 20.00 would set the stage for a run at the June 2011 high of 20.90, with further upside potential coming in at 21.50. It is interesting to note that the November Class IV Milk contract has overcome 19.40 resistance and appears more mature in breaking out of its ascending triangle pattern. However, a concern for the bullish traders comes from the stochastics indicator, which failed to confirm the early August drive to 20.00, suggesting that a corrective decline is in order before mounting another attempt. Swing low support on the weekly charts comes in at 18.44. Upside breakout confirmation comes on a weekly