Sugar Futures: 2012-03-19

Sugar Futures

Let us examine May sugar. We saw a price high occur towards the end of February. Prices are now in the same range as they were at that time. The previous high was 25.81, the high for today was 25.70 which was also the closing price. Prices may or may not rise the 0.11 to match or beat the late-February high, but unless they show strength MACD has so far failed to match its late-Feb high. Let us observe the daily chart for May sugar.

As was previously stated, prices are making highs into the same range as late February. The MACD histogram and the MACD moving averages are not reciprocating with new highs creating an MACD divergence. So long as they maintain lower highs, I will be looking for a shorting entry opportunity. Click the link to learn more about MACD divergences. Let us now examine the 60 minute chart for May sugar.

Here we are seeing a possible entry opportunity as prices have made a new high over the past few days, while the MACD histogram and moving averages are both in decline. This MACD divergence on the 60 minute time frame is giving me an entry signal to sell short. Since the market is close, I will be watching May sugar early tomorrow morning to see if the signal has perpetuated overnight.

Summary

I have observed MACD divergences occurring simultaneously on the daily and 60 minute time frames for May Sugar futures. I will be watching very closely over the next 24 hours for a short entry opportunity. If I enter, I will use a safety stop loss order to minimize risk exposure. If entry occurs, my target will be in the vicinity of 24.50 or possibly 24.00, as this is where my moving average on the daily chart is.

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