Sugar Technical Outlook (D,W,M,Y)
Created on Tuesday, 22 September 2015 03:11
Written by Austin Galt
Sugar has been in a strong downtrend and has is now down at levels which are pretty close to those forecast to see in the final low back in February 2015. Let’s review the technicals beginning with the big picture yearly chart.
SUGAR YEARLY CHART
We can see the strong downtrend that has been in force since the 2011 high at $36.08. Price hit a low recently at $10.13 meaning price has fallen more than 70%. Spanked!
Price is now down in a zone which previous analysis marked as an area for a major low to occur. I have drawn a green highlighted circle to show this zone.
I have added Fibonacci retracement levels of the move up from the 1985 low to 2011 high and price is now down at support from the 76.4% level which stands at $10.27. While this may be the final low my personal opinion is price will make one last rally before coming back down and trading marginally lower.
I have drawn two Fibonacci Fans. The bearish fan shows price is now down near support from the 76.4% angle while the bullish fan shows price is down near support from the 88.6% angle.
The Bollinger Bands show price has pushed a bit below the middle band as it gives that support a good test. I am looking for price to rally back up to that middle band now which stands just above $15.
I have drawn an uptrend line from the 1968 low which has provided support at the major yearly lows since then. That is massive support but I doubt price will fall that far.
The Stochastic indicator is still bearish but has been that way for quite a while so perhaps a change in direction is due.
SUGAR MONTHLY CHART
The Bollinger Bands show price appears to be leaving the lower band and I expect a move back to the middle band at the minimum while I actually favour a more significant rally that gets back to the upper band.
The PSAR indicator still has a bearish bias which has been in force for nearly two years now. The dots are likely to be around $12.20 in October and I favour a bullish bias to be just around the corner.
Price looks to be trading towards the end of a wedge formation denoted by the two downtrend lines. I expect price to break out shortly to the upside.
As laid out in previous long term analysis in February 2015, there appears to be a massive 5 point broadening top in play and price is now in a potential area to bring in a point 4 low. Personally, I favour one last marginal low after a significant bear rally but I could be wrong.
The lower horizontal line denotes the 2007 low at $8.37 and I favour the point 4 low being above this level.
The upper horizontal line denotes the 2006 high at $19.73 and that level is resistance for any rally now.
As for where any bear rally may top out, I have added Fibonacci retracement levels of the move down from high to recent low and the 23.6% level at $16.25 looks like a good target to aim for. Let’s see.
The RSI shows a bullish divergence while if price were to make a marginal new low in future then that could possibly set up a triple bullish divergence. That would like inviting to the bulls.
The MACD indicator is bearish but a bullish crossover looks a real possibility.
SUGAR WEEKLY CHART
We can see a solid downtrend has been in force with a pattern of lower lows and lower highs. That pattern remains unchanged as it stands now but nonetheless I still suspect the low to be in place.
The recent low at $10.13 was accompanied by a quadruple bullish divergence on the RSI. I’d like to see a significant bear rally now before price comes back much later on and makes a marginal new low and still sets up a triple bullish divergence using the longer time frame.
The MACD indicator is now bullish.
The Bollinger Bands show price is currently milling around the middle band. While price could certainly head back to the lower band and resume the downtrend I favour some oscillation around this band before price sets sail for the upper band.
The PSAR indicator now has a bullish bias with the dots underneath price. Some upside follow through now would look nice.
I have drawn a Fibonacci Fan which shows price recent trending down along the 76.4% angle. Price looks to be giving this angle a good test at the moment and recovering that angle now would look bullish in my opinion. And perhaps the rally will run into resistance at the 88.6% angle which is much higher still.
SUGAR DAILY CHART
The Stochastic and MACD indicators are both bearish indicating the likelihood of lower prices in the very short term.
The PSAR indicator now has a bearish bias.
The Bollinger Bands show price just under the middle band and I am looking for a higher low around the lower band.
I have added Fibonacci retracement levels of the move up and the two levels I am focusing on to bring in the higher low are the 61.8% level at $10.75 and the 76.4% level at $10.31. Normally I favour the 76.4% level but given the massive downtrend that has already played out I am leaning to price clipping the 61.8% level. Let’s see.
I have drawn a Fibonacci Fan and I expect the higher low to be around support from the 76.4% or 88.6% angle.
The rally will be confirmed once price takes out the previous swing high at $12.80 and is denoted by the horizontal line.
Summing up, price is now pushing into the target area for a major low as outlined in previous analysis. In the meantime I believe a significant bear rally is now upon us.