Technical Analysis #C-RICE : 2018-10-19

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IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

US export sales rose last week while crop estimate was reduced. Will the rice price continue rising?

The US Department of Agriculture cut the 2018/19 US rice crop estimate in this month’s WASDE report by 0.7 million hundredweight (cwt) to 218.8 million on lower yields. The average yield forecast was lowered 24 pounds per acre to 7,539 pounds. And rice ending stocks were lowered 0.7 million cwt to 44.2 million as no other supply and demand changes were made this month. And the weekly export sales report indicated another boost in net sales nearing a total of 58,000 MT for the last week. Increased US exports sales and reduced crop estimate are bullish for rice price.

Rice price breaches above resistance line Technical  Analysis IFC Markets

On the daily timeframe the RICE: D1 has been rising after hitting 4-month low in mid-September. It has remained above the 50-day moving average MA(50) after testing it and has breached above the resistance line.

  • The Parabolic indicator has formed a buy signal.
  • The Donchian channel indicates no trend yet: it is flat.
  • The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  • The Stochastic oscillator has breached into the overbought zone, this is bearish.

We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 11.149. A price above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the lower Donchian bound at 10.560. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (10.560) without reaching the order, we recommend canceling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position Buy
Buy stop Above 11.149
Stop loss Below 10.560

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