ICE Coffee Futures (KC) Technical Analysis – August 22, 2016 Forecast

Short-covering and the weaker U.S. Dollar are helping to underpin December ICE Coffee early Friday. Profit-taking ahead of the week-end is also contributing to the move. However, the trend is down so bearish short-sellers are likely to stop the rally once it reaches a value zone. Gains are likely to be limited because the harvesting of the larger-than-expected crop in Brazil is now in its final stage.

TECHNICAL ANALYSIS

TREND INDICATOR SWING CHART

The main trend is down according to the daily swing chart. A trade through 147.90 will change the trend to up. Momentum has shifted to the upside with the market overcoming the short-term retracement zone. Additionally, a new main bottom has formed at 137.85.

RETRACEMENT ZONES

The main range is 125.50 to 157.65. Its retracement zone is 141.60 to 137.80. The market successfully tested this zone last week.

The short-term range is 147.90 to 137.85. Its retracement zone is 142.90 to 144.05. Buyers overtook this zone, making it new support.

The intermediate range is 157.65 to 137.85. Its retracement zone at 147.75 to 150.10 is the new upside target.

GANN ANGLES

Earlier today, the upside momentum blew through several resistance angles before stopping at 145.40. The next major upside target angle drops in at 151.15.

On the downside, the nearest support angle comes in at 143.85. This is followed by the next uptrending angle at 140.85.

WHAT TO DO TODAY

Based on the current price at 145.00, the direction of the September ICE Coffee futures contract will be determined by trader reaction to the downtrending angle at 145.40. The daily chart indicates there is room to the upside over this angle with the intermediate 50% level at 147.75 and the main top at 147.90 the next likely targets.

A failure to overcome 145.40 will indicate the presence of sellers, however, we expect to see a labored retracement because of numerous potential support at 144.10 to 143.85 then 142.90. This is followed by a wide support area at 141.60 to 140.85.

Watch the price action and read the order flow at 145.40 the rest of the session. Trader reaction to this angle will tell us if the buying is increasing.