SINGAPORE: New York sugar is expected to fall further to 22.32 cents per lb over the next three months as its long-term trend has turned bearish.
A five-wave cycle was completed on the rise from the June 6, 2010 low of 13.82 cents to a record high of 36.08 cents, and the consequent decline has been too deep to be considered a retracement. Instead, it could be part of a long-term downtrend.
Wave pattern suggests a double zigzag mode for the current slide, labeled as "a-b-c-x-a-b-c", with the second wave "a" to unfold towards 22.32 cents, the 61.8 percent Fibonacci retracement on the rise from 13.82 cents to 36.08 cents.
The downside, however, could be extended much lower, as the major downtrend is eyeing an eventual target at 15 cents. Upon hitting 22.32 cents, sugar is expected to extend its loss to 19.07 cents.
Only a rise above 30 cents could abort the bearish outlook.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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