The Commodity Specialist view – Another Key Reversal Week in Sugar has appeared, an earlier one seen in Sep-09, which marked a distinct pause in uptrend. Prospects for another pause/pullback phase are currently good, so we here take a look at the technical factors.
- WEEKLY CHART – CONTINUATION:
Last week’s sell-off produced a Key Reversal Week, although the new high prior to reversal was marginal.
Nevertheless, we still think the signal must be given due respect.
First possible support comes from the 25.70 23.6% pullback level – but also note the 24.85 Sep-09 high not much below.
A s/term bounce would not surprise from around here, but should prove temporary. - DAILY CHART – MAR-10:
Previously in the Commodity Specialist Guide we had noted an apparent lack of bull conviction, accompanied by a negative RSI divergence.
The current sell-off is no surprise; but that Key Reversal Week signals something more – any rally is likely to be temporary ahead of further weakness.
A s/term support area is now being tested, starting with the 26.25 01-Sep high, and including the 50% & 61.8% pullback levels (which coincide quite well with supports on the Weekly chart). So a temporary bounce looks likely. Further important support also lies at the 76.4% level and channel base projection around 23.50. - We have said in the Guide that early bears may favour sales in the 28.00/29.00 area, stops just above the 30.40 high for limited risk, targeting 24.00 for partial profits.
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