Orange Juice Seen Rallying on ‘Wedge’ Signal: Technical Analysis

Orange-juice futures that are the cheapest for this time of the year since 2004 may rise as much as 15 percent after forming a descending wedge pattern, a technical analysis by Hackett Financial Advisors Inc. shows.

Prices topped $1.15 a pound last week on ICE Futures U.S. in New York, breaking the so-called support of the lower up-trending line in the formation, “signaling further gains in coming weeks,” Shawn Hackett, the president of the Boynton Beach, Florida-based company, said in a telephone interview. “It’s time to test the upward boundary of the wedge of $1.35, which would prompt funds to start piling in” and may send prices toward $1.40, he said.

Futures for March delivery rose 1.1 percent to $1.232 at 11:51 a.m. on ICE, which would be the eighth advance in nine sessions. The commodity has plunged 46 percent from a record $2.2695 on Jan. 23, 2012, amid slow demand for the beverage in the U.S..

While money managers and other speculators increased their bets on lower prices last week and are the most bearish since November, funds don’t tend to hold net-short positions for long, Hackett said. That’s because of frost threats during winter, or potentially crop-damaging hurricanes from June to November in Florida, the world’s largest citrus grower after Brazil, he said.

The net-short holdings, or bets on a price drop, increased to 612 futures and options as of Jan. 29, up from 35 a week earlier, according to government data compiled by Bloomberg. On Dec. 12, they held 6,093 net-longs, or wagers on a price rally, the most bullish since April, the figures show.

In technical analysis, investors and analysts study charts of trading patterns and prices to forecast changes in a bond, commodity, currency or index.

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