NY 2nd Month Sugar Futures
NY sugar futures weakened on Friday, breaking below the robust support levels of 40 and 10 DMAs. The market closed at 17.86. The stochastics continue to soften, with %K/%D breaking out of the overbought and sending a strong sell signal. The MACD diff is positive and converging, suggesting we could see lower prices in the near term to test the 17.71 support. A break below this level would bring into play the 17.50, which could set the scene for support at 17.00, which is a psychologically robust level. On the upside, futures need to gain back above 10 DMA at 17.94 in order to confirm upside momentum again. The reaffirmation of support here could trigger gains towards the recent highs. A longer upper wick, where most of the trading took place in the lower ranges, points to further selling pressures. However, prices need to break below the current support level of 17.70 to confirm the outlook.
Ldn 2nd Month Sugar Futures
Ldn sugar futures weakened on Friday after investors rejected prices above 512.60, prompting a close below at 502.50. The stochastics are falling, with %K/%D falling out of the overbought territory, suggesting a growing downside trend. The MACD diff is positive and converging, indicating improving sentiment on the downside. To confirm another bearish candle, prices need to break below the support level of 10 and 40 DMA completely before targeting the 493.80 level. Tertiary support stands at 480; a break below would confirm the outlook on the downside. To regain upside conviction, futures need to close back above 10 DMA at 504.54. This would then help form robust support levels of shorter-term DMAs, and with the 10 DMA crossing above a 40 DMA – a golden cross – prices could then find a robust support level in the longer term. If the DMAs hold today, we could see growing upside pressures.
NY 2nd Month Coffee Futures
NY coffee futures held their nerve on Friday as intraday trading saw prices struggle above the 400 resistance once again, prompting a close at 396.70. Both the %K/%D and the MACD diff remain elevated but are starting to show signs of tailing off, suggesting that there is a lack of momentum to break significantly higher in the meantime. However, if the robust 400 resistance level is breached, this could confirm the continuation of the longer-term upside trend up to 405. On the downside, the same trendline has to be broken below to trigger a trend reversal to the 10 DMA at 373.31 and 350, respectively. A gravestone doji candle shows rejection of higher prices above 400 and could be a signal that futures have reached their peak. We anticipate prices will struggle to break higher today, which could be a sign of a short-term correction in the near term.
Ldn 2nd Month Coffee Futures
Ldn coffee futures edged lower on Friday after prices broke below the 10 DMA at 5589, prompting a close at 5564. The stochastics are falling, with %K/%D diverging on the downside, and the MACD diff is positive and converging. To confirm the bearish indicators and rejection of prices above 10 DMA, futures need to take out support at 5569 and then target 5500. On the upside, futures need to close back above 10 DMA to gain momentum to the regression upper channel of 5750. We expect futures to weaken in the near term.
NY 2nd Month Cocoa Futures
NY cocoa futures softened on Friday, but support at 10000 prompted markets to regain some momentum later in the day, closing marginally higher at 10113. The stochastics are nearing the oversold territory and are starting to tail off, suggesting waning selling pressures. The MACD is negative and continues to diverge on the downside. A break of 10000 could set the scene for lower prices to test the 9542, the December low. On the upside, futures need to break above the near-term resistance of 10260 in order to confirm the upside trend, confirming the hammer formation. Indeed, the 10000 support level has been robust, and a hammer candle formation could point to upward momentum in the near term. We expect futures to remain supported by that level in the near term.
Ldn 2nd Month Cocoa Futures
Ldn cocoa futures held their nerve on Friday as futures struggled below the 800 level, closing at 8056. The K/%D is seen tailing off on the upside, which could send a strong buy signal in the near term. To do this, futures need to break back above the 8300 level. A break above this level towards 10 and 40 DMAs, currently at 8670, would confirm the strong bullish momentum. Conversely, appetite for prices below 8000 could trigger further softness to 7348 – a recent low. A long-legged doji candle shows indecision about either direction as it trades between the 8000 and 8300 levels; the length of the wicks also points to increased volatility during the day. The indicators point to a change of momentum on the upside, but with a death cross formation in the DMAs, futures are capped by 10 and 40 DMA in the near term. We expect modest gains up to these levels before a possible downward trend change.
