Chart of the Day: Sugar

The most recent sell-off in the commodity space has been volatile in the high flying names like Gold, Silver, Copper and Crude Oil but if you trade commodities, you've probably noticed that most members of the grains and softs group created tradeable tops in February - April.

Today, Sugar illustrates my point as the market topped on 2/2/11 and is now working a five wave decline. Currently, w.3 of w.(3) is very mature and I expect w.3 to complete at 20.46, where w.v of w.3 = .618 {w.(i-iii)}. Once complete, w.4 will unfold in a sideways correction where w.4 = (.383-.5) w.3 between 20.39-24.31. Also note that the previous w.iv of one lesser degree surrounds these key areas and provides a possible short trade setup as a print above 25.47 (previous w.1) invalidates the count and tells us where we are wrong.

We can also find a similar pattern if the iPath Sugar ETF. Without repeating myself, the key targets are the same as the Sugar futures contract.

I hope you found this information helpful and ....

Best of Trading