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SUGAR Technical Analysis - SUGAR Trading: 2018-04-05
Higher supply estimates bearish for sugar prices
Analysts estimates for 2018-19 global sugar supply surplus are being upgraded. Will the sugar price continue falling?
International trading companies forecast an increase in Indian and Thailand sugar production. Rabobank estimates Indian sugar output will be 4.0 million tons higher at 31.7m tons in 2017-18. The estimate for Thai output was raised by 900,000 tons to 13.5m tons, and the forecast for European Union production in 2017-18 was upgraded by 400,000 tons to 20.9m tons. Rabobank also upgraded by 3.3m tons to 4.3m tons the sugar output surplus in 2018-19 in its first forecast for the world sugar supply and demand balance. Higher global supply is bearish for sugar price.
On the daily timeframe SUGAR: D1 is trading with negative bias after hitting ten-month high in the end of November. The price has fallen below the 50-day moving average MA(50).
- The Donchian channel gives a downtrend signal: it is tilted lower.
- The Parabolic indicator has formed a sell signal.
- The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
- The stochastic oscillator is rising but has not reached the overbought zone.
We expect the bearish momentum will continue after the price closes below the lower Donchian bound at 12.23. A price point below that level can be used as an entry point for a pending order to sell. The stop loss can be placed above the upper Donchian bound at 12.91. After placing the pending order the stop loss is to be moved following Parabolic signals. Thus, we are changing the profit/loss ratio to the breakeven point. If the price meets the stop loss level (12.91) without reaching the order (12.23), we recommend cancelling the order: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
| Position | Sell |
| Sell stop | Below 12.23 |
| Stop loss | Above 12.91 |
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