July 22' Sugar #11 Futures Technical Analysis Bearish Case
Going back to November 18, 2021, July 22’ Sugar was in a downtrend, which was broken on Mar 1, 2022 with a close of 18.12. This began a new Primary uptrend, remaining intact until April 20, 2022.
Even though this trendline was broken with conviction (closing on the lows of the day April 20), the market rallied on April 21, closing at 19.81 (6 ticks from the high). This close touched that broken trendline, but this time, from the opposite side!
More importantly for April 21, the market bounced off 19.49 (low of the day), which was previous major resistance (Pink Line Mar 7-10). Previous resistance tends to become support when a market is in an uptrend.
Friday, April 22 brought a solid down day, taking out not only the 19.50 level, but closing below the first major Fibonacci Level (.382) of 19.29. This day brought the most volume (78.31k contracts) since April 13.
April 13 was the contract high yet closed the day forming a Gravestone Doji Top.
Moving onto technical indicators, the MACD (Moving Average Convergence Divergence) is currently below its 9 EMA (bearish), and below levels not seen since Mar 18 (Sugar had a high of 18.88 that day, well below where we are trading today!). This is considered Negative Divergence, as Sugar is trading higher today, then the last time period when MACD was at these levels.
Bearish Case:
Up trendline on a Daily chart that is broken.
Daily Gravestone Doji Top completed on the contract high.
Negative MACD divergence.
Currently trading below the .382 Fibonacci retracement level from the previous trendline.
18.92 (50% retracement level) is very likely to be seen sooner than later. One thing to keep in mind is that 19.50 could be revisited, yet this time acting as resistance. If 19.50 is revisited, and remains intact as resistance, a close below 19.17 in needed as confirmation to continue lower.
-Paul Wankmueller CMT
Even though this trendline was broken with conviction (closing on the lows of the day April 20), the market rallied on April 21, closing at 19.81 (6 ticks from the high). This close touched that broken trendline, but this time, from the opposite side!
More importantly for April 21, the market bounced off 19.49 (low of the day), which was previous major resistance (Pink Line Mar 7-10). Previous resistance tends to become support when a market is in an uptrend.
Friday, April 22 brought a solid down day, taking out not only the 19.50 level, but closing below the first major Fibonacci Level (.382) of 19.29. This day brought the most volume (78.31k contracts) since April 13.
April 13 was the contract high yet closed the day forming a Gravestone Doji Top.
Moving onto technical indicators, the MACD (Moving Average Convergence Divergence) is currently below its 9 EMA (bearish), and below levels not seen since Mar 18 (Sugar had a high of 18.88 that day, well below where we are trading today!). This is considered Negative Divergence, as Sugar is trading higher today, then the last time period when MACD was at these levels.
Bearish Case:
Up trendline on a Daily chart that is broken.
Daily Gravestone Doji Top completed on the contract high.
Negative MACD divergence.
Currently trading below the .382 Fibonacci retracement level from the previous trendline.
18.92 (50% retracement level) is very likely to be seen sooner than later. One thing to keep in mind is that 19.50 could be revisited, yet this time acting as resistance. If 19.50 is revisited, and remains intact as resistance, a close below 19.17 in needed as confirmation to continue lower.
-Paul Wankmueller CMT
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