Short covering rally in sugar to end shortly, or new uptrend beginning? | RJO Futures

May 17, 2017 3:30PM CDT

This week’s comment finds July sugar working hard to carve out a bottom. Price action from the last three trading sessions has taken July sugar up over the 18 day moving average, 15.77. In fact, the July contract has closed above the 18 day moving average TWO days in a row, first time since late February. Declining open interest and increasing volume along with our market breaking out of a rough looking cup with handle formation speak to a near term bottom for July sugar. Both strength in crude and the Brazilian currency are touted by analyst Hightower group as reasons to arrest the downtrend in the July sugar contract. Fundamentally, it is difficult to see how sugar could mount a rally on its own merits at this time. Oftentimes, the market will turn technically before the fundamental perceptions can change. This can make it wiser to trade what you see on the chart as opposed to waiting for the fundamentals to line up neatly. With the 18 day moving average at 15.77, any test of this area could be bought using 15.46 as a tight level to manage risk. Traders more committed to the long side could use a move to new lows, below 15.24 as a less tight but equally effective area to make sure they are not buried under a resumption of the downtrend.  

 

Jul '17 Sugar Daily Chart

Jul '17 Sugar Daily Chart

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