ICE Coffee Futures (KC) Technical Analysis – October 10, 2016 Forecast

December ICE Coffee futures are trading higher on increased demand caused by the weaker dollar following Friday’s disappointing U.S. labor market report.

Sellers hit the New York-traded Arabica coffee market last week with hedge funds shedding their long positions by 6,311 contracts, the biggest sell-off in four months. Prices dropped about 4% in the process over the last week. Favorable rainfall across key growing regions of Brazil triggered the selling pressure. The unexpected precipitation helped boost hopes for the setting of flowers, which will develop into the beans harvested next year.

TECHNICAL ANALYSIS

The main trend is down according to the daily swing chart. However, Friday’s closing price reversal bottom and the subsequent follow-through move earlier today signaled a shift in momentum to up. The main trend will turn up on a trade through $154.95. A move through $145.20 will negate the reversal bottom and trigger a resumption of the downtrend.

The main range is $137.85 to $160.90. Its retracement zone is $149.40 to $146.65. This zone has been providing support for the last seven days.

The short-term range is $154.95 to $145.20. Its retracement zone is $150.10 to $151.25. This zone is the first upside target today.

The intermediate range is $160.90 to $145.20. Its retracement zone at $153.05 to $154.90 is the next upside target.

FORECAST

Based on the current price at $148.70, the direction of the Coffee market today is likely to be determined by trader reaction to the major 50% level at $149.40. The next rally could be labored because of potential resistance levels at $150.10, $151.25 and $151.45.

The angle at $151.45 is the trigger point for an acceleration to the upside with the next major targets coming in at $153.05 and the resistance cluster at $154.90.

On the downside, the support is clustered at $147.20, $147.10 and $146.70.

Watch the price action and read the order flow at $149.40 today. Trader reaction to this level will tell us if the buying is getting stronger or if sellers are regaining control.