Sugar Futures - Adding to shorts

There seems to be a bit of bullish sentiment prevailing in the markets in regards to sugar, largely attributed to a weaker than expected output from Brazil. More here. Previous analysis calling for $15 here.

Regardless of this bullish development, I still think that Sugar is poised to drop lower. So I have a new pending order at 16.77, targeting 15.10 (rounded off).

Sugar Futures Update, 24/04/14

AUDCHF - Trade Follow Up

This post is a follow up to the previous chart I posted about a potential trade opportunity that is arising out of AUDCHF. The reason for following up on this trade is because i'm currently short targeting the neckline of 0.81114. At the same time, I have pending orders, one at 0.81114 and the other at 0.80875 (which is the monthly pivot level).

I expect price to retest the neckline before reaching out to its Inverted H&S target at 0.84454. The chart below is updated and i've kept it quite simple. Nothing much has changed since the chart posted in the previous article.

AUDCHF - Renko Charts, Updated 19/04

The next chart is the same view but using the traditional candlesticks, to gain an idea of the price action. While the chart might look cluttered, i'ts very simple. We identify the inverted head and shoulders and we also notice the support/resistance areas on the chart.

AUDCHF - Price Action, 19/04

I would be eager to trade the leg up as AUDCHF longs have positive swaps along the way.

Some key notes to remember. Australia quarterly inflation is due on Wednesday, with an expectation of 0.8%, unchanged from the previous quarter. A reading below expectations could push Aussie pairs lower. However, i'd be keen to see how this will play out.

In case the inflation reading beats estimates then the trade idea could be invalidated. So instead of a retest of the neckline, price could just reverse and zoom out to its target. If inflation comes in line with expectations then I don't see any big moves playing out. Also note that China's HSBC Manufacturing PMI is due out 15 minutes after Aussie Inflation data which is an additional risk on the trade.

China's manufacturing PMI has been on the decline. A good example is the Jan 23rd PMI reading which was at its worst at 49.6 from an expected 50.6 and down from previous month's 50.5. AUDCHF dropped like a rock. However later data seem to have been well digested by the pair. So it will be interesting to see how the PMI reading will influence the AUDCHF pair.

Besides the above events on Wednesday, there is no more Aussie data left, which brings us to the month of May. The first week's big fundamental releases are likely to be the key drivers for AUDCHF. So I expect AUDCHF to complete its leg down by end of April and things should pick up by early May, especially from around the US NFP release.

Natural Gas - Trade Follow Up

Following up to the trade idea posted for Natural Gas here, today's DoE NG inventories came out smaller than expected in regards to the stockpiles. NG futures, initially dropped during the day and especially ahead of the report, only to surge more than 3%. If you recollect, a trade call was made to BUY Natural Gas. Also, I mentioned the resistance of 4.7, which is where price is at currently.

Expect a bit more choppy trade before NG futures price continue to surge higher. Traditionally, summer months (at least in Europe) are a time to stockpile on Natural Gas. However, the ongoing geo-political tensions between Ukraine and Russia could play spoil sport at least for the EU, which in turn could put pressure on global prices (read as US).

All said and done, it will only be a matter of time before Natural Gas trades in the upwards of $5 and more. Thus, if you have bought Natural Gas at around $4... hold!!