Trading the trend: short NY #11 sugar
As NY #11 sugar is approaching its December low and May high resistance zone while remaining within its long-term downtrend, we would like to go short with a stop loss at 20.10, and a downside target in the 18.00 region.
(Partial Video Transcript)
Previous spot gold and US dollar basket trading outcomes
Axel Rudolph: Good morning and welcome to “Trading the trend” on Wednesday, the 26th of June 2024. At the beginning of the month, we went long spot gold and as you can see here on the Daily Financial Bet, we basically did rise from our entry level, which is this horizontal line here, $2,333 per troy ounce. But since then have come off and more or less traded around our entry level.
If you didn't get out last week when we had another small profit, then what I would suggest is to keep the same stop loss that we had in place since the beginning of this trade, which is just below the May low at $2,278 per troy ounce because that trade remains valid with its sideways to bullish range, as long as we stay above that May low.
And last week we went short the US dollar basket and you can see here we did so around 104,85. Right now we are underwater on that one. As you can see, the dollar index continues to rise, but our stop loss is still in place above the April high, above 106,20. So that trade is still ongoing; even if it is short term, I'm not making any money.
This week's trading opportunity
Today I'd like to look at the front month's sugar futures prices. As you can see here, we've been falling since November of last year. We've got a very clearly defined downtrend and over the last few weeks we've been grinding higher, as you can see, since the end of May. But what we are also seeing is that we are now approaching the previous early May high in late April highs which tied in with the December low, and they all come in around the 20 area, which is also the psychological resistance.
And for that reason, plus the fact that this week's new high, sort of seven week high, has not been confirmed by a high reading of the relative strength index here at the bottom of the chart where we see potential negative divergence forming. So for that reason, I believe the downtrend will likely continue and that we will fail below this resistance area 20 and head back down again towards 18.
And that's why I would like to short New York #11 sugar futures. So, today's “Trading the trend” is to short New York sugar futures with a stop loss above the psychological 20 mark. Maybe at 20.10 or something like that. And a downside target around 18.
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