Technical Analysis #C-ORANGE : 2017-04-26

Demand for orange juice may increase in summer

The US Department of Agriculture (USDA) reported a decline in the stocks of frozen orange juice and a drop in crops. Will the orange juice prices rise?

According to data on 03/31/2017, the stocks of frozen orange juice in the US amounted to 502, 22 million pounds. This is by 27, 4% less than the last year’s level. On 03/31/2016, the stocks of frozen orange juice were 701, 95 million pounds. In its April report, the USDA forecasted orange crops in the amount of 119, 37 million standard boxes (90 pounds or 40, 8kg.) in 2016/17 season. Of these boxes, 67 million boxes are from Florida. This is much less than the crops in 2015/16 season, which amounted to 141, 89 million boxes, of which 81, 7 million boxes were from Florida. In 2014/15, 146, 6 million boxes of orange were harvested in the US, of which - 96, 95 million from Florida. Theoretically, a decline in the stocks and crops may increase the cost of orange juice in the summer season, when it is in great demand.

On the daily timeframe, ORANGE: D1 is in a downtrend. It has formed a triangle. In order to open a buy position, the prices should first breach upward from the triangle. The further increase is possible in case of an increase in demand in the summer period and a decline in crops and stocks.

• The Parabolic indicator gives a bullish signal.

• The Bollinger bands have widened, which means higher volatility.

• The RSI indicator is below 50. No divergence.

• The MACD indicator gives bullish signals.

The bullish momentum may develop in case ORANGE surpasses the last fractal high at 160. This level may serve as the point of entry. The initial stop-loss may be placed below the 11 – month low, the last two fractal lows and the Parabolic signal at 147, 9. After opening the pending order, we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 147, 9 without reaching the order at 160, we recommend cancelling the position: the market sustains internal changes which were not taken into account.

Summary of technical analysis