HighGround Dairy Technical Commentary – November 13, 2013

CME Class III Milk Futures December Class III Milk registered a bearish outside day reversal during Tuesday’s session, and that presents a negative headwind for the market over the near-term. The market managed to mark a new six day high (18.24), a tick above 18.23, but seemed to lack conviction on the upside to hold those gains. Instead, the market reversed course, on above-average trading volume and saw a slightly lower low during Wednesday’s session. This represents a shift in near term sentiment and paints a bearish bias over the market. This favors a test of last week’s low of 17.78, which corresponds with a Fib retracement level of the August through November rally. The key question is whether the milk market is strong enough to contain further weakness. A breach of 17.78 favors a deeper slide to 17.57. Near-term resistance for the December contract comes in at 18.24, then last week’s high of 18.45, which coincides with an upside target of 18.50 and the April contract high of 18.50.