Noel Campbell
Noel Campbell 		A few weeks back I wrote about the 180-degree pressure date on the chart of Sugar. I actually entered the market the day after the low and sat tight with stops under the 180-degree low. The market rambled sideways for a number of days and then finally made a sharp move to the upside. You can see in Chart 1 the recent market action for SB-SpotV.
Chart 1

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Soon after the sharp run up the market then turned around and made a 3-Day Island Reversal top. Not a good sign if you are long! This signalled time for some caution and to lock in what profits remained. You can see where I have outlined the entry and exit points on the chart.

Taking a look at Chart 2 we can see the bigger picture for the Sugar market. There is a long-term trendline running across the tops starting from early 1995. The market is currently bumping its head up against the trendline. You can also see the time between the retests of the trendline are decreasing Also the market is making higher lows on the bigger picture.


Chart 2

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The forward contracts for Sugar are trading at quite a premium to the current October contract and the roll over will see us well above this trendline on the Spot V chart. It is well worth applying a close filter to the breaking of this trendline to reduce the chance of being caught by a false break. You would not use a 3-Day close filter in this case, more likely you would look to a 3-week close filter. Watching for the market to close above the trendline for 3 consecutive weeks.

You would need to use normal swing chart entry rules to safely trade the breaking of the trendline. We also need to see a higher top on the bigger picture, following on from our higher bottoms to officially say the long-term trend has turned. That would mean we are watching for the February 2002 high to be broken at a minimum. Patience is a virtue!

Until next week......

Noel Campbell