SGG (iPath DJ-UBS Sugar ETN) was covered in Monday’s Technical Analysis of Commodities ETNs video along with CANE (another sugar ETN, Teucrium Sugar Fund) in which the case for a potential trend reversal & rally soon was made. Member @ixtlanian inquired within the trading room about today’s large drop in SGG & as this one soon be added as an official trade idea, I wanted to share my reply here for all to see, along with some additional charts & annotations on both SGG & $SUGAR (sugar continuous futures contract).
The large white trendlines on both the price of SGG & the momentum indicators below show the positive divergences that have been forming on SGG since the late June ’17 lows while the smaller yellow lines are the more recent divergences building as $SUGAR tests the 2016 & 2017 lows as well as the mid-2015 reaction high.. a key support level. Whether sugar prices reverse around current levels or following a relatively brief undercut of those previous lows, I favor a trend reversal soon that will likely bring SGG up towards the 32 area in the coming months.
SGG daily March 7th
The next chart below is an EOD (end of day) chart of $SUGAR, the sugar continuous futures contract. $SUGAR is approaching decent support (dashed line at the 0.127ish level). Should it break below soon, that would be a powerful divergent low & with the breakdown likely to prove to be a false breakdown/bear-trap followed by a tradable rally.
$SUGAR daily March 7th
Keep in mind that EOD charts are updated each evening after the close of the regular session so the chart above does not yet reflect today’s drop in sugar prices. As timing is everything when it comes to swing trading & also very important when investing & being too early is often the same as being wrong, I’d prefer to wait for the charts to firm up before adding SGG as an official trade idea. Remember, the second mouse gets the cheese. As such, SGG will be added to the Long Trade Setups category at this time but with an official entry trigger, price targets & suggested stop TBD.