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Sugar rallied powerfully since the end of September, but right now is showing signs of fatigue. It found a strong resistance at the market profile Point of Control and we think the time is ripe for a nice retracement. The volume has declined day after day during the whole rally and last week the march 2016 sugar contract wasn't able to break through the 14.5 level.

sugar daily chart

You might object that sugar could simply be pausing to re-accumulate before the next upside leg. We don't think so, mainly because the last COT reports show a violent rush to sell this contract by the side of commercials. Why should the sell so violently if they don't think sugar is already overpriced?

february 2016 sugar cot chart

Also the seasonal chart reinforce our vision: sugar is currently followinng its seasonal trend and, as you can observe in the following chart, it's got the tendency to decline from the beginning of october till the beginning of december. Maybe it could still produce a last spike higher, but we think we'll soon witness a nice deep retracement. Remember this is not a trade solicitation and if you decide to trade you do it at your own responsibility.  

sugar seasonality

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