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I've gotten into trading sugar tonight. I've entered a long position at 20.14at 00:34, my time. I talked briefly about this trade in my last post for 2012-10-17. I'll talk a little more about my technical analysis trading system, and show some commodity charts for March sugar to serve as visual aids. I really love futures trading online because I really do have so many tools available at my disposal. Also, it is very easy to demonstrate my method and tools to others, for example, with this website.
Anyways, lets get into the nitty gritty by looking at these futures charts starting with the daily chart for trading sugar using the March 2013 contract.
There really isn't any specific signal going on here. Its several generalities that don't contradict my trade.
First, we can clearly see that prices are in the low zone. Other fundamental factors, which I have not mentioned, still tell me to be on the bullish side of sugar in terms of the bigger picture. Since prices are in such relatively low zone, I am naturally going to look for long entry opportunities.
MACD is not contradicting my trade, as of yet. We are not seeing new MACD lows. The MACD histogram is below zero, but it appears to be losing momentum and could up-tick as early as next session. The latest MACD high, from about a week ago, isn't that high at all. It would not be difficult to beat it, this means there is a high upside potential. But that is really just wishful thinking. Only time can ratify that dream.
Again, the daily chart here isn't really giving a specific buy signal. I usually like to see that when I make this type of sugar trade. What is rolling around the back of my mind, is that we may still by on the same bullish dynamic from the last MACD divergence buy signal that occurred just over a month ago. I realize this is far fetched. However, if this is true, then we could see a very good upside potential here. I am open to exploring this possibility with a trade. After all, I will be using stop loss orders to limit my downside.
Lets look at my 60 minute futures chart for trading sugar and see some of my technical analysis trading system at work.
Observe the red lines that demonstrate the MACD divergence that has formed in sugar in the 60 minute trading chart. This was a buy signal. I did not buy, I wish I had, oh well. Then, observe prices spend a few bars above the moving average. This is good confirmation. The last ten or so bars have been below the moving average. This is not exactly great to see, but its not necessarily bad. What it does mean, assuming that my technical analysis has been correct, is that it is a good value buying opportunity. If my anylysis is wrong, my stop will catch the downward break and I'll lose a few bucks.
What is somewhat worrisome about this chart is that the MACD seems to be lagging. If the uptrend goes strong as I am hoping, this could easily correct itself. However, the way it is now could be a sign that it will not work the way that I hope.
My bigger picture analysis is telling to look for excuses to get long in sugar. I have my excuse on the 60 minute chart, and the daily chart is not contradicting me. As always, it is extremely important to use stops when futures trading online, or not online. We all make mistakes, and we are all at risk of misinterpretation. Stops mitigate our inevitable mistakes, and let us live to trade another day.
In other markets, I'll be watching to see if the US dollar index and natural gas futures play out the way I anticipated. I hope I don't make a pooch out of myself and have all three markets go the opposite way that I said I thought they would! I'm still patiently waiting for gold to cheapen up.
posts listed chronologically below