Technical Analysis #C-COFFEE : 2019-09-12

[IFC Markets]

Lower Columbia coffee output bullish for coffee price
Columbia coffee output declined in August. Will the coffee prices continue rising?

Columbia coffee production in August 2019 amounted to 1.119 mln 60-kg bags, down 11.0% from 1.258 mln in the same month last year, data from the Fedecafe - National Federation of Coffee Growers show. Columbia is the third largest coffee producing nation in the world - 810,000 metric tons of coffee beans in 2016. Lower Columbia coffee output is bullish for coffee prices.

On the daily timeframe the Coffee: D1 has breached above the resistance line and the 50-day moving average MA(50), these are bullish developments.

• The Parabolic indicator gives a buy signal.
• The Donchian channel indicates uptrend: it is titled up.
• The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
  
• The RSI oscillator is rising but has not breached into overbought zone yet.

We believe the bullish momentum will continue after the price breaches above the upper boundary of Donchian channel at 95.51. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed above the last fractal low at 94.49. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (94.49) without reaching the order (102.75), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Order Buy
Buy stop Above 102.75
Stop loss Below 94.49