Sugar futures have recently pulled back from the yearly highs above 31 cents a pound to form a Falling Wedge pattern on the 240 minute candlestick chart. The volatility has remained somewhat muted when compared to the broader commodities markets, which have been largely influenced by the tumultuous swings in the stock market.
The narrowing of the range as the price approaches the apex of this Falling Wedge chart pattern suggests a breakout may be setting up this week. With key resistance beneath Tuesday's swing low of 27.90 cents per pound to define the bottom of the wedge, there is a slight bias to this formation.
An upside breakout will require a rally back above 29.40 cents from the present level to definitively breach the wedge resistance. If this occurs is may trigger a momentum driven move back above the point at which the wedge began, which would put the price trajectory on track for a new contract high.
Despite the retracement to the current level, the long term chart remains in a solidly bullish uptrend with a move to the mid-30 cent range seen as a likely target area.
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