IFC Markets - Analytics

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Technical Analysis #C-ORANGE : 2015-06-01

Summertime rally

Let us consider the orange juice CFD. In mid-March they reached the 3-year low but didn't manage to break it down. Since then, the orange juice has been traded in a slowly ascending range. Because of estimated low crops in Florida the CFD has showed on March, 20 the strongest 3-day rally in 16 years. Later, the forecast was not confirmed, but anything is possible, since the harvesting in the state will be over only in September. According to the forecast by Citrus Defense Fund, published on May, 19, the production in two main Brazilian states in the season 2015/2016 will amount to 279mln 40.8 kilo boxes. Brazilian Association of Citrus Exporters assumes that internal juice consumption will make 60mln boxes and the remains will go to the global market. Investors believe that will not completely supply the demand, resulting in a significant drop in Brazilian juice reserves to below 200 thousand tons. After the data were released the juice quotes have jumped more than 8% in 3 days. The futures marked later a pullback due to the weaker Brazilian Real. The juice CFD expanded again on Monday.

ORANGE

On the daily time frame the orange juice has been traded in the uptrend below the 200-day Moving Average. Bollinger Bands are still narrow, which may indicate low volatility. At the same time they do not demonstrate a strong ascending slope. MACD bars are located below the zero and the signal lines, designating a bullish momentum. However, it appears to be weak due to the bar graph low amplitude. Parabolic has been giving buying signals. RSI-Bars has shaped a slight growing divergence and moved above 50. If the orange juice CFD closes above the upper Bollinger band and the four latest fractal highs (121), the bullish momentum may continue. The most cautious traders are recommended to wait until the current trend top is breached at 122.3. We are looking forward to that because the trend slope is to small to assure a long-term movement. A stop loss may be placed below the first Parabolic signal, the Bollinger line and the neutral trend lower boundary, which is confirmed by the fractal, – at the 109 mark. After pending order activation the stop loss is supposed to be moved every four hours near the next fractal low, following Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most careful investors may switch to the H4 time frame and place a stop loss, moving it after the trend. If the price reaches the stop without triggering the order, we recommend to remove the position: the market sustains internal changes that were not considered.

 

Position Buy
Buy stop above 121 or 122,3
Stop loss below 109


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