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Welcome back and Happy New Year to all Trading Tutors Newsletter readers.
During the break I enjoyed a leisurely drive up to Queensland, stopping at a few mid-north NSW beaches along the way (best in the world!) and passing fields of sugar cane as we headed further north. One day I plan to stop and tour one of the sugar refineries to learn more about the industry but on this trip we were more interested in consuming copious amounts of it and giving our brains a rest. Now, back at work in my home office, I am ‘stalking’ sugar, and preparing for its next move.
Sugar futures have been promising action for a while now but a little more patience is required. Sugar has been going sideways for some time, with contracting swings and lower tops that can be seem on the monthly swing chart. I have reproduced both the bar and swing charts below:
Chart 1: Sugar Weekly Bar Chart with Wedge Formation
click to enlarge
Chart 2: Sugar Monthly Swing Chart with Lower Swing Tops
click to enlarge
At some point the wedge formation shown in Chart 1 will be broken and when it does I would expect sugar prices to make some tradeable moves. Chart 3 displays the position on Sugar in relation to the ranges resistance card. The current action is around the 50% level and also around the old top. Is this a false break and will the market rise again? Remember the expression “old tops become new bottoms”. This has nothing to do with fashion and everything to do with charts!
The maxim was relevant to the low that formed in May, 2011 as it sat just above the 2006 high. Could we currently be looking at a false break of this level? In November, 2012 my Platinum Newsletter article suggested that the lower monthly tops were a sign of weakness and in Chart 1 we can see that the lows are also gradually lower.
Chart 3: Sugar with 50% of Range
click to enlarge
I am waiting for sugar to push away from this price pressure point - in either direction - then come back and use it as resistance or support. At the moment price is where it needs to be but it seems we are waiting for time to catch up and hence there hasn’t been a strong reaction.
This is not the place to be giving away forecasts but I would suggest that the next seasonal date could be one to watch. There would be quite a bit of harmony running Time by Degrees® back from around that date.
There is always plenty of action in the markets. The key is to stalk the ones you know in anticipation of the next move and to follow a few varied markets.
Be ready to move on your market and you could have a great start to 2013.
It’s the Journey
Lauren Jones |