As anticipated, sugar has once again found tremendous support around the 17.00 – 17.05 level on the chart, which represents the lower boundary of the current digestive range. After briefly testing the Fibonacci confluence zone below this area from 16.92 – 16.98, price held to close the session above 17.00. Having found support at these levels and closed above support, price was poised for a rally off the lower boundary of this range and this morning’s price action certainly hasn’t disappointed traders. Price spiked above 17.50 before pulling back a bit to current levels.
If this morning’s positive momentum can persist and price can trade above the 38.2% retracement level at 17.59, there is not much significant technical structure to prevent prices from retesting previous levels around 17.85 and 18.00. This morning’s price action serves as a perfect case study on how traders can take advantage of a sideways market.
By being patient and waiting for price to align with technical S/R near the extreme boundaries of the range, traders can effectively maximize their risk/reward ratio on a trade. Whether or not price will make a move back to the upper boundary of the range has yet to be seen; however, traders now have an even better idea of what levels of support are governing price action near the lower end of this range.
Sugar 30-minute Bar Chart (e-Signal)