Commodities Markets - Sugar Prices

A major gainer in the commodities markets for most of 2010 was sugar, which led the way for the rest of the tropical exports into long term or all-time high territory. World sugar futures traded near 35-cents per pound before a year-end correction ensued, the highest price fetched since the 1970’s.

The most recent price action in Sugar futures shows the early development of a possible ABCD chart pattern on the Autochartist Fibonacci Pattern identification platform. The pattern shown is forming on the 240-minute time interval and currently measures 65 bars in length, slightly past the anticipated half-way point, should the pattern carry out to completion.

The ABCD chart pattern begins at point A, when Sugar ended the sideways congestion phase t had been held in for much of the first half of December. The ensuing rally carried the market to a swing high from there, forming the point B prior to a sharp and swift correction back to the old resistance level just above point A. This set the stage for the rally back up from the swing low created at point C, and establishes the target measurements required for projecting the possible point D price forecast highlighted by the pick dot near 36.70 cents per pound.

This will take the Sugar market back into strong bull market territory, with very little recent price activity to guide the market on a technical basis in the longer term. ABCD patterns can be helpful under these conditions as they require only recent price action to calculate likely resistance parts well above or below a markets recent trading range.

If the market maintains the upward momentum and tempo to achieve the targeted price at point D of 36.70, traders will likely be watching for a retracement from that level. This is already projected in the Fibonacci retracement levels marked on the chart, with the shallowest expected retracement to come at the .382 level, and the deepest correction anticipated near the 1.618 extension.

A pullback from to the first few targets would indicate a normal, overall healthy correction in an orderly bull market. However, a sell-off to below the 1.00 level (equal in price to the C point where the rally initiated) would suggest a possible long term top was established at point D, and likely trigger technical sell signals on shorter term frames.

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