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Sugar Strength May Be Sapping

16 July 2009

Sugar is one of the Softs that has been performing very well over the last few weeks. However, certain bull targets have been reached/exceeded and we are looking closer now for a pullback phase.

After a prolonged triangular consolidation on the continuation chart the bull break worked well (unlike a recent one in Cocoa).
Our 76.4% target was reached/ exceeded, and there is now scope for a pullback phase.

DAILY CHART – Oct-09::
The recent upleg off 15.61 17-Jun low almost reached our Fibo projection at 18.20. This projection is related to the fact that the current 38.2% pullback virtually coincides with this low.
There is a chance that this represents a final blow-off move ahead of a corrective phase – the market may need some more time however before this gets properly underway.
Note also a possible negative RSI divergence.
The 16.91 01-Jun high has been s/term supportive – breaks of this and the 16.52 23.6% pullback level would be negative signs. Just the chance nearby 16.17 Jul-08 high will be temporarily supportive but of more interest would be the lower 15.61/55 38.2% area. It is uncertain how bearish one should get here but this at least warns off eager buyers for now. Sell strategies will accordingly not be greedy initially.

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