Sugar futures showed impressive strength during last week’s commodities sell-off

(Daily Markets) – Sugar futures showed impressive strength during last week’s commodities sell-off, indicating the market may have enough intrinsic strength to buck the broader trend and move higher on its own. After a prolonged sideways movement near the low end of a textbook Channel Down chart pattern, the price bumped just above resistance going into the close of the market on Friday.

The pattern is best seen here on the Autochartist 240-minute time frame, identified as a completed pattern now that the breakout has occurred. The pattern scores high marks in all categories except the breakout momentum, with an overall Quality ranking of 7 bars. The low momentum score reflects the soft breach of the resistance with no follow-through as of yet. However, given the extreme weakness in most commodities last week, and the overall pessimism in the broader markets, traders are likely to view even the modest rise above the breakout level as being significant.

The price for sugar is projected to reach a minimum of 23.43 cents per pound based on this chart development. The Autochartist currently provides a range as high as 23.91 cents per pound to complete the breakout. Acceleration of momentum would encourage a possible overshoot of this forecast, as the market moves away from the long term Channel Down and possibly sets up bullish patterns on shorter time frames.