Technical Analysis #C-SUGAR : 2020-02-27

IFC Markets

Master Trader
Oct 31, 2012
London (Great Britain)
Parabolic SARSell
Bollinger BandsSell

Chart Analysis
IFC Markets Tech Analysis

On the daily timeframe, SUGAR: D1 broke down an uptrend support line. Now it is moving down from its maximum since November 2017. A range of technical analysis indicators generated signals for a further decline. We don’t rule out a bearish trend if SUGAR falls below its last low: 14.4. This level can be used as an entry point. The stop loss is probably higher than the last two upper fractals, the upper Bollinger line and the Parabolic signal: 15.4. After the pending order opening, the stop loss can be moved following Bollinger and Parabolic signals to the next fractal maximum. This way, we change the potential profit / loss ratio in our favor. After the transaction, more risk-averse traders can switch to a four-hour chart and set a stop loss, moving it in accordance with the trend. If the price overcomes the stop level (15.4) without activating the order (14.4), it is recommended to close the order: market sustains internal changes that were not taken into account.

Fundamental Analysis
Downtrend world oil prices may cause reduction of biofuel production in Brazil. Will SUGAR quotations decrease?

In Brazil biofuels and sugar are produced from sugarcane. Therefore, in a period of low world oil prices, Brazilian farmers are reducing the production of bioethanol and increasing sugar production. In addition, the weakening of the Brazilian real is also a bearish signal for sugar, which is being traded now near a 2-year high. Brazil is the world leader in sugar production with a share of about 20%. India is the 2nd largest sugar producer in the world and the largest consumer at the same time. The Indian Sugar Mills Association (ISMA) raised its forecast for sugar production in India in the 2019/20 season from 26 million tons to 26.5 million tons. At the same time, the surplus of sugar in 2020-2021 may amount to 6 million tons. The Indian government can encash this volume in the global market.