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© 2017 by Blue Line Futures, LLC. 

The Blue Line Breakfast Report

January 9, 2020

Softs Market Mover Focus

 

Sugar

 

March sugar is in a tight horse race with most other commodities up about 1% on the year as of this writing. Out of the 48 key markets we track about 22 are positive and 26 are negative on the year. Sugar continues to trend higher despite sharp sell offs in the energy markets telling you that the fundamental story continues to grow as Indias sugar production is showing a deficit. Keeping an eye on the Brazillian Real, it may have stopped selling off to consolidate however, Im suspicious that it might be forming a head and shoulders chart pattern.

 

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Daily Chart Analysis

 

Price Outlook

 

Sugar is threatening another breakout to the upside as the volatility has picked up in the market. Looking at Stochastics, being in the middle of the range, we are indicating that we are in a consolidation phase. ADX which shows the strength of the trend, has declined to 22 indicating that the strength of the upward trend is weakening. My bias is that the market will hold the upward trend line and the breakout from the flag formation will continue and extend the move up. Use the bottom of the flag and upward trend line as risk management for support.


 

Cocoa

 

March Cocoa is about even on the year for performance but looking to strengthen. Remember that cocoa is mainly impacted by the economy and although it is expanding, geopolitics may play a role in the perception in the strength of the economy.

 

Daily Chart Analysis

 

Price Outlook

 

Watch for a breakout of this wedge and the possibility for a run for the recent highs. Stochastics are beginning to climb into overbought territory ADX is weakening showing that the downward selloff might be out of steam. Keep an eye on 2575 if we see a breakout over this trend line we should change from a consolidating market to a bull market.

 

Coffee

 

Worst performing commodity on the year down over 7.5% as of this writing while palladium is its mirror image up 7.5% on the year. The Brazillian Real is not providing much support at the moment and I have attached a Bonus chart below so be sure to check it out. What Im watching is the size of Brazil's 2020 coffee crop which is up double digits in comparison to 2019.

 

Daily Chart Analysis

 

Price Outlook

 

Watch the downward trend as it has been aggressive in nature just like the bull rise from the lows. Moving averages havent been offering much support so I would disregard the 50 day moving average as support. Stochastics have slid into oversold territory so the bears regain control and I would expect weak longs to throw in the towel soon so watch out for a volume spike. Keep an eye on ADX as the bear market may be gaining strength.

 

**Bonus Chart**

Brazillian Real Chart

 

 

 

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By Phillip Streible

 

312-858-7303

 

Phil@Bluelinefutures.com

 

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Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results

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