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Rice Investments Technical Analysis - Rice Investments Trading: 2017-08-21
China continues to sell the state grain reserves
On Friday, China sold 511.8 thousand tonnes of rice from state reserves. This was reported by the Chinese National Grain Trade Center. Will the rice prices decrease?
At the state auction on Friday, the 23.3% of the total volume of rice was sold. In general, currently China intends to sell 2.2 mln tonnes of the 2013 rice harvest. On Wednesday, 97 thousand tonnes were sold. The selloff is a part of the replacement program of the Chinese state reserves. Note that in the current agricultural season, a large rice harvest is expected in Indonesia (80.08 mln tonnes) and the Philippines (19.2 mln tonnes). At the same time, rice harvest markedly decreased in Bangladesh because of flood.
On the daily timeframe, Rice: D1 is overcoming the support line of the rising trend. The full downward correction is possible in case of an increasing world production and sale of rice from the Chinese state reserves.
- The Parabolic indicator gives a bearish signal.
- The Bollinger bands have narrowed, which means lower volatility.
- The RSI indicator is below 50. It has formed a negative divergence.
- The MACD indicator gives a bearish signal.
The bearish momentum may develop in case Rice drops below the last fractal low at 12.08. This level may serve as an entry point. The initial stop loss may be placed above the last fractal high, the 2-year high, the upper Bollinger band and the Parabolic signal at 12.77. After opening the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More 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 level at 12.77 without reaching the order at 12.08 we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Sell |
| Sell stop | below 12,08 |
| Stop loss | above 12,77 |
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