It’s an actively traded soft commodity and benefited of a speculative bullish trend during more than 2 years and a half, between June 2004 and early 2007. Orange juice futures are quoted and traded on the ICE (Intercontinental exchange, previously NYBOT, New York Board of trade).
The weekly chart first: prices jumped by 287% between extreme points (A and B) of the bullish trend started 5 years ago. The correction drove back the price of the high of $209 to a recent low posted at $64 in last February (point C). As well as the other commodity futures, the orange juice future has bounced back sharply and is now trading around $96. What are the perspectives now?
On a weekly perspective, it sounds quite bullish. Most of the indicators fell to low levels at the beginning of the year and have strong potential upside. The MACD, for instance, has been bullish since early January this year, therefore before the actual rebound generated later in February. It has also just found some support recently on its moving average when the price action sharply corrected during the month of June.
On a daily basis, it’s a different story. A sharp and fast rebound followed the correction of June and drove the price from $73 to $105 in less than a month. That’s a 44% jump with a surging volume. As a result, the commodity has been clearly overbought and the indicators turned bearish last week. The RSI surged and reached its overbought zone. It has already crossed below its signal line and is now plunging. The Chaikin Money Flow illustrates quite well also the rising volume that created this upside move in July. It has peaked and is now slightly curving downward. This suggests that a deleveraging is probable, which means profit-taking and therefore further price retracement.
The current level is an intermediary support but should not hold. The next target may be the level of $90, which is actually the last significative one before the low of $73.
On longer term, the price objective is clearly on the upside, probably around $120, which is the 38.2% Fibonacci retracement of the 2-years decline occurred between 2007 and 2009.
