Arabica Coffee Technical Analysis | Arabica Coffee Trading: 2018-07-05 | IFCM
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Arabica Coffee Technical Analysis - Arabica Coffee Trading: 2018-07-05

Estimates of higher production bearish for coffee prices

USDA estimates increasing coffee supply in 2018/19. Will the coffee price continue declining?

The US Department of Agriculture estimates world coffee production for 2018/19 at 171.2 million 60kg bags while the global consumption is forecast at 163.2 million bags. The record production is forecast 11.4 million bags higher than the previous year and ending stocks are forecast to rebound following 3 years of decline. Forecasts of increasing supply and ending stocks are bearish for coffee prices.

Coffee price

On the daily timeframe the COFFEE: D1 is below the 50-day moving average MA(50) which is falling, this is bearish.

  • The Parabolic indicator gives a sell signal.
  • The Donchian channel indicates downtrend: it is tilted lower.
  • The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
  • The Stochastic oscillator has breached into the oversold zone, this is bullish.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 112.07. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 119.52. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (119.52) without reaching the order (112.07), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

PositionSell
Sell stop Below 112.07
Stop loss Above 119.52

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This overview has an informative and tutorial character and is published for free. All the data, included in the overview, are received from public sources, recognized as more or less reliable. Moreover, there is no guarantee that the indicated information is full and precise. Overviews are not updated. The whole information in each overview, including opinion, indicators, charts and anything else, is provided only for familiarization purposes and is not financial advice or а recommendation. The whole text and its any part, as well as the charts cannot be considered as an offer to make a deal with any asset. IFC Markets and its employees under any circumstances are not liable for any action taken by someone else during or after reading the overview.

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