NY 2nd Month Sugar Futures
NY sugar futures sold off yesterday as a lack of appetite for higher prices above 40 DMA helped to pierce the 10 DMA support; the market closed at 17.96. Stochastics are still rising, with %K/%D diverging on the upside. The MACD diff is positive and has remained flat day on day, suggesting a lack of momentum into either direction. The last two days formed a bearish engulfing pattern, a sign of an impending market downturn. The sell-off yesterday and close near the lows suggest further selling pressure below the current support level of 10 DMA at 17.99, and the above-mentioned indicators support lower prices. A break below this level could set the scene for a test of support at 17.62. On the upside, resistance around 40 DMA at 18.28 would help reaffirm the bullish trend in the near term up to the resistance of 18.44. We believe that the market lacks conviction, and prices should continue to trade sideways between 10 and 40 DMA bands.
Ldn 2nd Month Sugar Futures
Ldn sugar weakened yesterday as protracted selling pressure triggered a close on the back foot at 521. The stochastics are rising with %K/%D diverging on the upside. The MACD diff is positive and flat. A full bearish candle with no shadow suggests growing selling pressures; this could set the scene for lower prices to break below the 10 and 40 DMA support levels at 520. This would confirm the trend for falling prices, down to 512.90. On the upside, resistance at 530.20 has proven to be strong, and an appetite above that level would strengthen the bullish momentum. This could also trigger gains towards the 540. Narrowing support and resistance levels are creating a narrow trading range, but we believe that the prices will edge marginally lower today.
NY 2nd Month Coffee Futures
NY coffee futures edged marginally lower yesterday as intraday trading saw prices test support at 234.30. The market closed at 235.20. The RSI is falling, and %K/%D is about to converge on the downside into the overbought. The MACD diff is positive and converging, suggesting growing selling pressures. The indicators point to lower prices in the near term, and to confirm the rejection of the support; prices need to take out 230. Appetite for prices below this level could trigger a test of 10 DMA at 227.74. Alternatively, a break back above 240 would confirm that the upside trend is not yet over and a subsequent bullish momentum. A narrow candle body after similar candles shows a lack of conviction in recent days, signalling uncertainty about the outlook for lower prices. The futures need to take out the 230 level to confirm the outlook for falling prices.
Ldn 2nd Month Coffee Futures
Ldn coffee futures failed into 2281 yesterday as prices closed at 2261. The stochastics are falling rapidly, with %K/%D diverging on the downside, and the MACD diff is positive and about to converge into the negative territory, a strong sell signal. The rejection of higher prices may prompt a break back towards 10 DMA at 2265; a subsequent breach of this level could trigger losses towards 2215. On the upside, a break of 2281 and 2300 may prompt futures to retest 2355. A subsequent breach of this level would prompt prices to regain upside momentum. Three black crows pattern formation confirms indicators’ outlook for lower prices in the near term.
NY 2nd Month Cocoa Futures
NY cocoa futures edged lower yesterday as intraday trading caused prices to fail above 2420 once again before closing at 2408. The stochastics are rising, as the MACD diff is positive and diverging marginally, highlighting the marginal appetite for higher prices. Buying pressure remained weak yesterday, but the indicators are still positive; the bulls need to break above 2420 in order to reaffirm upside conviction up to 2430. On the downside, if selling pressure intensifies today, this could prompt a test of 10 DMA at 2394. A break below this level would bring into play a test of 40 DMA at 2377. We expect futures to push slightly lower in the near term as they struggled above key resistance at 2420.
Ldn 2nd Month Cocoa Futures
Ldn cocoa futures rallied yesterday as protracted buying pressure triggered a close on the front foot at 1863. The RSI is rising, while %K/%D is rising and diverging in the overbought. The MACD diff is positive and diverging. On the upside, a break above the current level could trigger gains through 1880, the highs not seen since October, towards robust resistance at 1900. On the downside, a break below the key support level of 1837 could trigger losses back towards 50 and 100 DMA at 1773 and then robust support at 1750 to confirm the outlook of lower prices in the longer term. We believe that prices will strengthen today, although the overall trend is showing to be overbought.