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TFC Commodity Trading Forum

Re: Corn.../March Sugar Chart/Randolf *PIC*

I prefer price action on the Daily chart to see these "tight channels". I'm not a fan of Bollinger Bands as anything wavy like that is not actually a definate channel. And I'm from the old school regarding technical analysis and chart patterns etc. But regardless of what I prefer the Bollinger Bands "Squeeze" does capture the same idea which shows price action has reached a point of indecision and tight consolidation. A small short pattern could be called a Flag. Also with a sharp move also but often brief. But a Channel is always best with fairly strict price action and tight small price bars over a few weeks. Like the old adage goes "After small bars comes big bars". That is what that saying was referring to. This March Sugar chart which tends to be volatile has consolidated in a 'fairly' tight channel at 22.80 support and 23.45 resistance. Not prefect but nothing ever is. And price is working its way towards the downtrendline resistance as well. So this consolidation is waiting for something. Doesn't matter what, as "it" will be resolved one way or the other with a breakout or breakdown. Note the high volatility normally seen with Sugar. Now look to the left and see the previous 'tight channel' of June/July and August 2010 and what happened when price broke out of that channel. 'KABOOM'. Very typical. This chart doesn't show before this occurred but see the dotted line above that June to Aug channel. It marked the top of a full year resistance point that was tagged numerous times and couldn't be cleared. Breaking out of both saw the bulls take full control of Sugar for a long time. The tight channel in the end told you something big was about to be decided. This can be bought as an ETF:SGG as well within a self directed trading account. It is presently 81.14 -1.91. I haven't checked what the OTM options are on puts and calls. Sometimes they are expensive regardless. But the longer price tracks sideways the less the option sellers can get for them. And of course Options on the March Sugar contract expire in February. Not a long time. Might work out ok but the next contract would be better for time. Far more expensive but with options you need time to stay alive.