For the past two days I’ve been looking for a breakout move in the sugar futures. Instead of a move, the range tightened up again on Friday. Will this result in a move on Monday?
March sugar futures had a breakout setup for Friday; Thursday was an inside day, an NR7 and a doji bar. Additionally, the longer term trend is down and it spent the past two days holding just above the 20 day EMA. Friday ended up with another inside day with a resulting new NR7 and it was a doji bar, so the breakout setup will still be in play for Monday.
We should keep an open mind as to direction for a breakout day but I’m going to focus on the short side here, given the down trend and the fact that ROC is still high enough to be considered at sell signal levels.
For Monday I would consider two potential sales. For more aggressive traders, look to short on a break below the Wednesday / Thursday low of 20.26- that’s where I was looking to short it today. If you want a more conservative entry, look to short a break below the January 19 / 20 low of 20.05. The 200 day SMA is in this area, and 20.00 should be a psychological pivot point.
If we get short, we can place stop losses above either the Thursday or Friday high. (You could also use these for reference prices for an upside breakout if you would want to play a rally.) The first downside target would be 19.61, a 50% retracement of the rally from the December low to the January high.
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