Before I dig into the nitty gritty of this potentially sweet trade setup,
I would like to first wish everyone a Merry Christmas and Happy Holiday!
Being from Canada I'm very lucky to be able to spend quality time with my
family for the next month down in the sunshine state of Florida. I sure love
the ocean breeze, sand between the toes, palm trees, and heat. Its amazing
how cold Floridians make a sunny 70-degree day look being all bundled up in
pants, jackets, and hats, while I live in my bathing suit practically the entire
time I'm down here. I don't put on pants or a sweater until its 65ish out side
or a restaurant demands I must wear pants and I'm still sweating wearing all
that clothing. Its great to be back in America!
Ok, lets get back to this sweet trade setting up!
In this article I show you my analysis and share my thoughts on what is likely
to take place with sugar looking forward 2-3 months if not longer. Instead
of writing a long article I have attached three charts which clearly show my
thinking and price projections.
Monthly Chart of Sugar
The monthly chart moves as slow as molasses for trading and investing but
it does provide valuable information. The key data it shows us are the major
trend, support and resistance levels, and potential reversal signals via candle
stick patterns.
Typically, if a chart shows a long lower or upper wick it signals price has
found either support or resistance and a change in direction is likely to occur.
The chart below is currently showing up what I call "Tweezers". Two candles
both with long upper wicks which tells us seller are present and selling into
the buying pressure. This is a great signal that lower prices are very possible.
You should keep in mind that we are only half way through the month of December
which means this candle still has another 10+ days of trading before it closes.
So this is not a true tweeze pattern until the month is over.
Daily Chart of Sugat and CoT Data
This chart below shows some very interesting data which one of my subscribers
pointed out a couple weeks ago. I have been watching the price of sugar waiting
for a potential setup to form and it looks as though the time has come which
I will show in more detail later in this article.
What I like most about this information is the COT data. Specifically, the
spec traders position which show the average joe/gamblers are all very bullish
trying to get their sugar fix J.
Typically, the small spec positions are based on emotions and when everyone
is doing something, people don't like to be left behind so they follow the
herd mentality, BUY BUY BUY!
As you can see in the recent trading the price of sugar has been chopping
around with increased volatility, which tells me sellers are entering the market.
Daily Chart of Sugar Trade Setup
Below I have laid out visually the key resistance levels for sugar. Ideally
the sooner price breaks down the lower price is likely to fall as it will have
strong momentum. If price lingers and moves above the $15 level for several
days, then it wont be as bearish of a setup in my opinion.
The breakdown that I have drawn on the chart with red arrows shows the best
case scenario. Unfortunately, there is not an inverse EFT for sugar. For one
to profit from falling sugar you will need to short sell the sugar ETF SGG.
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Sugar Trade Setup Conclusion
In short, I think sugar is/has setup for a short trade and will fall over
the coming months. Nothing in the financial market is for certain but I do
like this trade setup for a small speculative position.
Stay tuned for more trading ideas as I have a great Holiday Gift Idea and
Trade that I will share in a few days... So get on my email list, or join my
premium trade alert newsletter and get all my trades, analysis and educational
videos so you can master the markets and profit for life!
