The Sugar Sweet Downtrend of 2015

Aug 11, 2015: 8:53 AM CST

Sugar’s slide continues in one of the most persistent and stable trend structures.

Let’s take a look at the persistent trend as sugar prices sour to sticky new lows, trapping bulls along the way.

Here’s a “Pure Trend Structure” Viewpoint of Sugar Prices (@SB):

First and foremost, the entirety of Technical Analysis (visual charting price) is built on the concept that trends, once established, have greater odds of continuing than of reversing.

Like an apt pupil, sugar prices exemplify this concept with perfection as a daily downtrend persists.

Study the “Trend Continuity” process and how to trade it with the “Perfect Pullback” Lesson Bundle.

Trends continue with interruptions – corrections – which allows to enter into the trend with low risk.

Note the small blue “flags” or retracements against the yellow persistent trend in price.

Each opportunity – especially as rice touched the upper falling trendline – allowed a low-risk trade set-up to join into the persistent trend.

What about reversal trades or trying to pinpoint a trend reversal?

That’s a wonderful and exciting way to lose a lot of money quickly!

Why make trading harder than it needs to be?  Look for trends and then shift your perspective to expect the trend to continue until clear reversal signals – like a break beyond a key falling trendline – develop.

Until then you’re only hurting yourself if you try to trade against trends like these.

Here’s another perspective that adds a few more helpful indicators:

While I prefer using a simple price chart to trade persistent trends (like the previous chart), indicators can also help you assess the odds of a trend continuing or of reversing.

Indicators can also help you pinpoint entries – retracements – into the ongoing trend.

Traders can use moving averages as guideposts for trade entry and management, trailing stops above the averages and entering new short-sell (in this case) trades to join into the ongoing trend (as price touches the underside of an average).

Stronger volume as the trend continues also can serve as a confirming indicator that the trend is more likely to persist.

Even if you don’t trade sugar – and I realize most traders don’t – you can still use this educational example as a reference for the trend continuity and retracement/pullback lessons.

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Corey Rosenbloom, CMT
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Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

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One Response to “The Sugar Sweet Downtrend of 2015”

  1. vidm Says: