Sugar Set For Correction

The sugar price has traded exactly as outlined in analysis titled, Sugar Technical Outlook, produced back in September 2015 and has seen price increase by just over 50%.

That analysis outlined the expectation for price to trade up to around the $16.25 level. Price just hit a high of $16.75 before reversing back down impulsively. I believe that completes the intermediate term rally.

Let’s review the technicals beginning with the weekly chart.

SUGAR WEEKLY CHART

We can see a five wave move off the low at $10.13 which I now believe to be complete.

The two horizontal lines denote previous swing highs which price has surpassed so a higher high is now in place. All that is required now is a higher low and the bull trend can really kick into gear.

The Bollinger Bands show a last gasp rally that got back up to the upper band. Price actually traded above the upper band which is a common feature found at significant tops.

I have drawn a Fibonacci Fan which shows the end of the fourth wave at support from the 76.4% angle while the recent high was at resistance from the 50% angle. I now expect a correction back to at least the 88.6% angle.

I have added Fibonacci retracement levels of this move higher and as the first correction in a new bull trend often makes a deep retracement I am looking for a move back to at least the 76.4% level at $11.69 and possibly the 88.6% level at $10.88.

Both the RSI and MACD indicator show a bearish divergence at this price high.

Now let’s update the monthly and yearly charts with the added data from the last six months.

SUGAR MONTHLY CHART

We can see the 5 point broadening top formation we have been following. This began with the point 1 high in 2010 and we now look to have the point 4 low in place as of 2015. It may take several more years before the point 5 high completes the pattern.

I have added Fibonacci retracement levels of the move down from point 3 high to point 4 low and previous analysis produced six months ago outlined the expectation for this first rally to end around the 23.6% level at $16.25. Price spiked up marginally above this level to a high at $16.75 so that’s looks pretty good.