Sugar Turns More Negative After 76.4% Test

The Commodity Specialist view - In our last Sugar Update we were looking at potential resistance from a long term Fibonacci level. So far the reaction around this has been negative and now there are further reasons to expect continued weakness.

• SUGAR 11 - MONTHLY CONTINUATION CHART: The bull leg that started from a 13.00 2010 low recently saw a test/erosion of the long term 76.4% recovery level. In the Commodity Specialist Guide we have been awaiting a clear reaction to this, and it has proved negative.
• SUGAR 11 - DAILY CHART MAY-11: After s/term resistance was found around an old high from Dec a fresh slip has now tested/eroded key, dual, support from the bull channel base and 38.2% 26.00 level. In the process the neckline of a Head and Shoulders has also been breached, providing an initial bear signal. Bears may be cautious about chasing the market here, noting a minor Fibo projection at 24.40, but any s/term rally should be temporary at this stage (and probably not deep), ahead of further weakness. The power should be there to extend to the 61.8% 21.60 area.

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