Sugar futures narrowed into a very tight range during last week trade and closed within the congestion area. Chart analysis reveals the overall price action as the final stage of a Triangle chat pattern, with the apex fast approaching to force a breakout. The pattern, shown here on the Autochartist 240-minute time interval, should help identify which direction the trend will take once the price moves away from this congestion zone. The zone is centered near 24.5 cents per pound.
The falling trend line creating the top of the triangle currently shows the key resistance to overcome at around 24.80 cents per pound. This area could be retested as early as Monday's session, with a move above this level required to trigger a buy signal and generate a higher price forecast.
A sell-off below the recent range with a move below 24.20 cents per pound would signal a failure of the trend line support offered by the triangle, and generate a breakout forecast for renewed weakness in the market. This would be indicative of a continuation pattern, suggesting the long term down trend from the 30-cent level continues to be the dominant trend. Such a move would invite a slide closer to the 20-cent level.
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