Sugar Crashed As Elliott Wave Predicted. Now What?

Bearish   

By early-November, 2023, the price of sugar had more than tripled from its pandemic low of $9.18/lbs in April, 2020. So, when we wrote on November 28th, that it was likely to tumble from $26.80 at the time to $20, our view was not very popular. When the price of anything has been going in only one direction for a long time, people tend to forget that it can go in the other, as well.

Alas, no trend lasts forever and Elliott Wave analysis is the methodology, which often helps us to spot the turning points before it’s too late. In late-November, 2023, it warned us that a notable drop in the price of sugar was lurking ahead. The chart below explains how it did it.

Price of Sugar completes Elliott Wave impulse pattern

The weekly price chart of sugar revealed that the recovery from $9.18 was a complete impulse, which we labeled 1-2-3-4-5. According to the theory, a three-wave correction in the opposite direction follows every impulse. In addition, there was a bearish RSI divergence between waves 3 and 5, unmasking the bulls’ exhaustion. So instead of joining the bulls around the $27 mark, we thought traders “can expect a notable retracement back to the support near $20 in wave (2/b), before the uptrend can resume.

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Sugar fell to $20.08/lbs in mid-December, 2023, down 25% since our bearish article. So the first part of the Elliott Wave prediction has already come true. Should we expect the uptrend to resume now, though? Let’s see what the updated chart below can tell us about that.

And the answer is, not really. The problem is that a complete correction consists of three waves. Sugar ‘s fall from $28.05 to $20.08 looks like a single one. This suggests that we’ve only seen the first wave, A, of a bigger A-B-C retracement, which is still in progress. If that’s correct, we can expect waves B up and C down to complete the negative phase of the cycle. Only then it would make sense to expect a sustained new uptrend to over $30/lbs. Wave B might lift sugar to the resistance near $25, but downside targets in the teens remain on the table in wave C.

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