Sugar 11 future contract for March maintains bullish tone and extends strong recovery rally to the highest since early March, following last week’s strong bullish acceleration which resulted in weekly gains of 13.4% (the biggest one-week rally since the third week of Sep 2015).
Sugar prices rose on strengthening currency of top producer – Brazil, which discourages producers to sell and signs that the EU is to reduce sugar exports, as output was impacted by low prices and poor weather conditions.
This week’s extension of strong rally reached levels near key barriers at $13.00/09 (psychological / falling weekly cloud base), but showing initial signs of stall.
Bulls face strong headwinds here, with price action being capped ticks under 13.00 barrier for the third straight day.
Overbought daily / weekly studies warn of pullback, with momentum turning south and showing bearish divergence, which adds to negative signals.
Repeated failure at 13.00 zone would be further warning, but initial signal of pullback could be expected on penetration of rising thick hourly cloud (cloud top lays at 12.58).
Bearish acceleration through 11.95 (hourly cloud base) and 11.76 (Fibo 38.2% of 9.81/12.97 rally) is needed to confirm reversal.
Res: 13.00, 13.09, 13.31, 13.82
Sup: 12.84, 12.70, 12.58, 11.95
