NY 2nd Month Sugar Futures
NY sugar futures continued to edge marginally higher, with Friday’s close slightly above the previous day at 18.41. Last week’s trading has been range-bound, as it traded between the moving averages. The indicators, however, suggest a growing sentiment on the upside, as %K/%D is diverging out of the oversold area, and the MACD diff is negative and converging. We expect this momentum to maintain, but the pace of gains will be marginal as futures struggle above the 18.50 level. If this resistance is broken above, the next level on the upside is at 40 DMA at 18.62. Alternatively, if the near-term resistance takes hold, this could send the prices back to 100 DMA at 18.09 before 18.00. Narrow candle bodies with longer upper and lower wicks last week indicate market uncertainty for the outlook in the near term.
Ldn 2nd Month Sugar Futures
Ldn sugar strengthened on Friday but still struggled to break the 40 DMA level and closed at 528.20. The stochastics are strengthening while the MACD diff is negative and converging. Friday’s bullish engulfing candle acts as a strong buy signal, and today’s open above the moving averages at 532.70 confirms that. To suggest further upside, the futures need to test the 540 level before 552.40, the recent high and where the double top formation took place in recent months. On the downside, weakening sentiment back below 40 DMA at 528.73 could send the prices back below 10 DMA at 523.89. The volume remains quite thin, and to suggest the outlook on the upside in the longer term, the market conviction should strengthen at the same time.
NY 2nd Month Coffee Futures
NY coffee futures edged higher on Friday, but the market lacked the conviction to break above the 154.55 level, and futures closed at 152.55. The stochastics, however, have converged on the upside in the oversold, and the MACD diff is negative and converging, suggesting a strong buy signal. To confirm this, the futures must first break above the near-term resistance at 154.55 before testing the 10 and 40 DMA levels at 157.12 and 162.93, respectively. Alternatively, downside support levels currently stand at 143 and 140, respectively. Friday’s longer lower wick shows that the market opened in the lower ranges before breaking above the 150 level in the latter part of the day to close near the highs. This goes in line with the indicators’ outlook, and we might see conviction build in the near term.
Ldn 2nd Month Coffee Futures
Friday’s candle continued the upward trajectory from the day before, rallying once again to close at 1916, the high not seen since October. A break out of the range-bound environment we have seen take place in recent months is a strong indicator for further price gains. Likewise, the indicators are rising sharply, with %K/%D stochastics strengthening closer to the overbought, and the MACD diff is positive and diverging. The same strength could be seen in the volumes, which are also at October highs, suggesting strong market conviction for higher prices. The next resistance level stands at 1914 – the level being tested today – and then 100 DMA at 1997. To confirm the momentum on the upside, the futures need to breach the 1914 level today.
NY 2nd Month Cocoa Futures
NY cocoa futures continued to be supported by the 10 DMA level on the downside as they continued on the longer-term upward trend. However, at the same time, the appetite for higher prices is not robust, and Friday’s marginal bullish candle closed below the resistance of 2671 at 2663. The stochastics are wavering between gains and losses, but are continuing to strengthen marginally, and the MACD diff is positive and has remained broadly unchanged in recent days. If the futures break above the 2671 level, we still expect them to struggle above the recent highs of 2700. The lack of appetite from the volumes also highlights the uncertainty surrounding the outlook for higher prices. At the same time, the 10 DMA at 2628 supports the trend, and if this level is broken, this could signal a change of trend down to 2600 before 40 DMA at 2543. In the meantime, we expect the futures to remain in the current ranges.
Ldn 2nd Month Cocoa Futures
In line with NY cocoa, London futures edged higher on Friday but struggled to break the 2012 resistance level, closing at 2011. The indicators, however, point to a strong buy signal, with %K/%D converging on the upside in the overbought, and the MACD diff is positive and diverging. We expect any upside momentum to be short-lasting, and after the near-term resistance level, the next level of resistance stands at 2050, the November high. On the other hand, if the 2000 resistance solidifies, we could see some downside back to 50 DMA at 1969 and then 100 DMA at 1922. We expect the momentum to remain on the upside in the near term.