Raw-sugar poised at key support :: Business Line

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The benchmark for raw-sugar futures, sugar No. 11 traded on the Intercontinental Exchange (ICE), advanced 2.5 per cent to 19.01 cents a pound on Friday.

Ever since bottoming out in 2004 at a low of Rs 5.27 cents, sugar contract has been in a long-term uptrend. This uptrend will remain in place as long as the contract trades above its vital long-term trend deciding level at 17 cents.

The sugar contract faces key immediate long-term resistance in the band between 23 and 24 cents. Decisive breakthrough of this resistance band can push the contract higher to 26 or 27 cents in the long-term.

However, an inability to rally beyond 24 cents will shackle the contract to a wide trading band between 19 and 24 cents. After registering an all-time high at 36 cents in February 2011, the sugar contract has been in an intermediate-term downtrend. However, significant support at 19 cents has been providing base for the contract from June this year.

The contract is currently testing this significant support level.

Strong downward breakthrough of the long-term support at 19 cents can pull the sugar contract down to 17 cents in the ensuing weeks.

Further decline below 17 cents will mitigate the long-term uptrend and drag the contract lower to 15 cents or 14 cents.

The daily indicators are displaying positive divergence indicating a potential trend reversal in the contract. Nevertheless, an upward reversal from the current support level will encounter significant medium-term resistance at 22 cents. Next resistance is at 24 cents.

Near-term trend is sideways consolidation in a narrow band. Immediate resistance of sugar is at 20.5 cents and support is at 18 cents.