Sugar

A little outside of many of your pursuits, but when trading opportunities present themselves it is best to be prepared before the herd becomes involved.

Sugar on the monthly chart and my 10 mile view.

This is as much data I have from this broker on the commodity and for the purpose of this post it is adequate. What we see is price moved sharply into old demand and has just as quickly left the area. This is a sign of buying and an area that has proved to be of value on all the historic times price reached this area. There is the possibility of a revisit, but for this time frame and with a closed montly candle we gain what intel possible from the chart.

Weekly.

Closer up action on price and the same lower grey box is visible and how price has bounced off it. This month has seen price engulf the previous two months price action and has closed strongly on its highs.

The upper tow blue lines are areas where I expect to react. The lower line is the most recent break lower of price and how preceeding this was a bullish fake out in order to gain enough long orders for pro money to sell into and push price down into the area they wanted to hit the most. Given food stuff commodities have a life cycle from the farmers, it is in the interests of the traders to get price low at the right time of year if they can. It wont always happen, but the ultimate price a farmers gets for his crop is out of his hands and is driven by the charts you see here. By the time the crop is planted, growing and getting closer to harvest, pro money will have positioned themselves long for quite some time before the retail trader even thinks about it. Deep pockets are needed to hold through this.

The retail trader wont be in on this move until price is above the upper blue line, and pro money will only be too happy to let them trade along side in order to drive price here at next to no cost to pro money. Its great when a plan comes together.

Daily.


The time frame most day traders look at because commodities are slow moving when setting up and there is plenty warning of up coming trades. On this chart price has come down after the false break higher....ask yourself, who would buy sugar in the northern hemisphere when none has yet been planted and there is no data on long term weather, events in the food industry and other factors driving this commodity.

At the bottom we see price bounce hard and fast with a strong close to the day, week and month. The two black lines are near term reaction areas with the upper of most interest. This is where the false move originated from in September. Those who shorted there will be bailing when price comes back and its possible we may see a small range develop. The lower black line is a possible low price for the range, but this is speculation and in no way suggesting this is how it will play out. While price winds up there will lots of bears who need to be taken out, the smaller guys get stops taken and the herd bail when the slightest pain comes their way.

4hr.

Closer in on the daily price action now. I added a blue line to show a support and resistance area on this time frame. This was broken strongly on the way down and we need to see how it will bechave when price comes back to it. Of note is price forming deeper pull backs on the way down after breaking the s/r. The grey box is where the two black lines from the chart above are drawn. Within this box there are two significant arrowed bullish candles. Both had lots of activity based on a futures charts I was watching and there is lots of money/orders remaining up there, neither candle was a looking for supply, it looks more to me like an attempt to slow the market down. It does gel nicely with a market turn when price gains support and turns bullish. If it plays out right, price should move away nicely from those two candles.

1hr.


This is much too close in for me and I have added it in so you can see some price action from the day traders perspective. There is a minor support and resistance area that have been breached in grand style and what is known as a parabolic move following the break. This is where price is reaching for the moon and is never going to stop as far as the herd are concerned. Remember the significance of where we are in time and price. End of day, end of week, end of month, big halt to further bearish move on Sugar.

The day/week/month ended with a number of results and the one of this time frame that should be obvious to all of you, is that there are no shorty traders on this chart remaining....even though price has hit historic supply on the left of the chart. Look at the very last candle of the day. It pinned supply, supply came in, supply was held back by the bulls and the price closed well off the candle lows. Holding back the tide of short orders is neither cheap or easy to do in a short period of time. Doing it in two days is impressive and now we wait for market open and see what next week brings.

All serious traders will wait for price to run from an area where it is sensible and where there will be lots of interest from others.