COFFEE Technical Analysis - COFFEE Trading: 2022-05-09

COFFEE Technical Analysis Summary

Sell Stop։ Below 209

Stop Loss: Above 239

Indicator Signal
RSI Neutral
MA(200) Sell
Fractals Sell
Parabolic SAR Sell
Bollinger Bands Neutral

COFFEE Chart Analysis

COFFEE Technical Analysis

On the daily timeframe, COFFEE: D1 has broken down the support line of the long-term uptrend and the bearish flag. A number of technical analysis indicators formed signals for further decline. We do not rule out a bearish movement if COFFEE: D1 falls below the lower Bollinger Band and the latest low: 209. This level can be used as an entry point. The initial risk limit is possible above the 200-day moving average line, the last three upper fractals, the upper Bollinger band and the Parabolic signal: 239. After opening a pending order, we move the stop following the Bollinger and Parabolic signals to the next fractal high. Thus, we change the potential profit/loss ratio in our favor. The most cautious traders after making a trade can switch to a four-hour chart and set a stop loss, moving it in the direction of movement. If the price overcomes the stop level (239) without activating the order (209), it is recommended to delete the order: there are internal changes in the market that were not taken into account.

Fundamental Analysis of Commodities - COFFEE

A noticeable strengthening of the US dollar may have a negative impact on the quotes of agricultural commodities. Will COFFEE quotes continue to decline?

The Fed raised the rate to 1% from 0.5%. Against this background, the US dollar index has updated a 20-year high (since December 2002). For 12 months, it has risen by almost 14%. Theoretically, this may contribute to the continuation of the correction of coffee quotes, which is traded in the US currency. An additional negative may be the emerging reduction in demand in China due to the coronavirus lockdown. In addition, we note the weakening of the Brazilian real, which is a bearish factor for coffee. Against the backdrop of the political crisis, deliveries of arabica coffee to Russia fell by 72% m/m in March and to Ukraine by 62% m/m. Russia is the 5th largest coffee importer in the world. The United States and the European Union are in the lead. It is now experiencing record inflation, which may also cause a reduction in demand for coffee. It should be emphasized that continued drought in Brazil can support coffee quotes. The agency Somar Meteorologia has reported a lack of rainfall in the state of Minas Gerais, which produces almost a third of the country’s coffee.