Crude remains near contract highs heading into Memorial Day weekend here in the States. Both the near-term and intermediate trend favor a bullish argument as prices continue to make consecutive higher peaks and troughs on the chart. Price action has been more or less sideways over the past two days, and crude could be vulnerable to a pullback to close the week if price is unable to surpass resistance from 104.18 – 104.30. Initial support in this market can be seen at 103.12 followed shortly by the 102.80 pivot. Any weakness below here has the potential to materialize into a much more sizable correction due to the lack of technical structure below this level.
The next potential support level doesn’t come into play until 101.73 and has yet to prove itself as a solid level of support. Given the recent run-up in price, there may be counter-trend opportunities in this market and a contrarian argument could be made that the market is a bit overbought at these high levels. Nevertheless, the trend remains positive and the higher probability trade appears to be buying pullbacks into support in anticipation of further gains in crude.
Crude Oil 30-minute Bar Chart (e-Signal)
Sugar continues to churn sideways within the well-defined digestive range that it has spent the past 2-3 months trading in. Once again, prices seem to be respecting the Fibonacci confluence zone from 17.29 – 17.31 on the chart, which may offer a valid area to enter long this market if this area continues to hold. Any sustained weakness below here will likely produce a continuation down to the 17.00 – 17.05 area as seen in earlier this month.
The main takeaway here is that price is now approaching significant support levels toward the lower end of its trading range, and traders looking to establish a long position may find value in the current Risk/Reward setup at these levels. Risk can be reasonably defined since the expectation is for price to remain in the digestive range, so a protective stop below the lower end of the range could assist bullish traders manage downside risk. The RSI appears to be diverging slightly with price action since the most recent price action low has yet to produce a relatively lower level in the RSI. If this bullish divergence persists, the RSI indicator could serve as confirmation to a bullish argument at the current Fibo. c-zone. Local resistance can be seen in sugar around 17.60 and 17.85 respectively.
Sugar 30-minute Bar Chart (e-Signal)