Sugar Gaps Up; Lows Likely in Place

October sugar futures at the New York Board of Trade on Tuesday gapped sharply higher on the daily bar chart and hit a fresh three-week high of 15.90 cents a pound, as of this writing. Bulls on Wednesday gained fresh upside technical momentum to suggest that a near-term low is now in place. Just last week, a steep four-week-old downtrend line on the daily bar chart was penetrated on the upside and negated.

Click on the chart to enlarge

Average Convergence Divergence (MACD) indicator overlaid on the daily bar chart for October sugar shows that a bullish line crossover signal occurred just recently, whereby the MACD line crossed above the “trigger” line of the indicator. The last time a similar MACD line crossover signal occurred was in late March. At that time October sugar was trading around 16.40 cents and proceeded to rally to a high of 18.37 cents in early April.
The next upside technical objective for the bulls is to close prices above resistance at 16.00 cents a pound. Above that lies resistance at 16.25 cents and then at 16.50 cents. On the downside, solid near-term technical support is located at the bottom of today’s upside price gap on the daily chart–at 15.60 cents, basis October futures. Below that lies technical support at the 15.30 cent level, and then at this week’s low of 15.18 cents.
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One Response to Sugar Gaps Up; Lows Likely in Place

  1. Larry @ Zaner Group June 22, 2006 at 8:10 am #

    Fundamentally, the market is supported by talk of Russian raw buying, coming tenders by Bangladesh for white sugar and reported Venezuela’s import needs. Dry weather might trim Brazil’s progressing center-south harvest, while demand for Brazil’s new-crop sugar and ethanol remains strong.