In this article, Mish Schneider, director of trading research and education at MarketGauge.com, highlights how agricultural commodities are fighting their way back after much disruption.
The pandemic has brought a multitude of supply chain disruptions reaching not only into the tech space, but also into the agricultural space.
Invesco DB Agricultural Fund [DBA] recently cleared major resistance at $16.87 from the 200-week moving average, plus resistance going back from highs of 2019.
Participating in the rise of agriculture has put some specific soft commodities on our watchlist, like coffee [JO] and sugar [CANE].
The soft commodities markets are made up of perishables such as cocoa, coffee, cotton, orange juice, and sugar, which are also some of the oldest tradable commodities still around today.
From a technical standpoint both look to be on the verge of a major breakout with a huge amount of upside potential.
JO recently cleared its consolidation area around $35 to $37.
Looking at the weekly chart shows that JO has been through quite some choppy price action in the past 14 months, with $40.70 showing a major resistance level.
Switching over to a more fundamental standpoint, coffee’s main distributor is Brazil, which has its currency (Brazilian real) consolidating around highs.
An increase in the value of the Brazilian real could cause an increase in price for coffee, as it becomes more expensive to import to the US.
With that said, fundamental reasons can be very speculative as they are tough to grasp a timeframe for.
The main point is, if JO breaks its current resistance it could open the price range back to highs from 2019 around $45.60.
The sugar chart looks to be in the same boat as DBA. It recently broke the 200-WMA and is just about to attempt a break over 2019 highs.
If this uptrend continues, and these key resistance points get cleared, the agriculture and soft commodity sectors could have a lot more room to grow.
This article was originally published on MarketGauge. With over 100 years of combined market experience, MarketGauge's experts provide strategic information to help you achieve your investing goals.