Sugar: Hard to digest

July (NYBOT:SBN14sugar continues to flirt with a downside breakout of the range that has dictated price action over the past two months.

Currently, price is slightly below the approximate lower boundary of the digestive range, and below here, the probability will likely favor further selling pressure. In order to negate this negative bias and restore confidence to the sugar market, price would need to trade back above technical S/R at 17.05 and hold for a close above here.

Given the Fibonnacci Confluence Zone from 16.92 – 16.98, as well as the 20- and 50-period Simple Moving Average’s converging above the market around the 16.95 area, one could make the argument that there is sufficient technical evidence to suggest heavy resistance in front of the 17.00 level. As a result, price action over the next 2-3 days could dictate the next directional price move in this market.

If price is unable to surpass the previously mentioned resistance area, then the odds favor bearish follow through in the market. Such follow-through will likely target the 16.77 and 16.53 levels respectively. In the event that price is able to surpass said resistance at 17.05, look for further digestive action with noteworthy resistance around 17.30.
 

Sugar 30-minute Bar Chart (e-Signal)

 

About the Author
Erik Tatje

Erik Tatje is currently a market strategist at RJO Futures and is the author of The Tatje Report, a daily technical correspondence. He has been an affiliate member of the Market Technicians Association since 2011 and has passed all three levels of the Chartered Market Technician (CMT) program. Erik can be reached at etatje@rjofutures.com or 312.373.5176. Learn more at www.rjofutures.com.

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