ICE Coffee Futures (KC) Technical Analysis – October 25, 2016 Forecast

December ICE Coffee futures are trading higher shortly before the regular session opening. The intraday rally took out the October 18 high to signal a resumption of the uptrend. This puts the market on course for a test of the September 22 top.

Fundamentally, there are still major supply concerns in top producer Brazil for 2017 and new worries over the newly-started harvest in Vietnam. Dry weather in Brazil is threatening both Arabica and Robusta-growing regions.

Technical Analysis

The main trend is up according to the daily swing chart. It was reaffirmed earlier today on the trade through $159.60. This move could create enough upside momentum to challenge the $160.90 main top from September. This price is a potential trigger point for a breakout into the April 22, 2015 main top at $162.10.

The new main bottom is $155.10. A trade through this level will turn the main trend to down.

Forecast

Based on the current price at $159.55, the direction of the coffee market today is likely to be determined by trader reaction to the previous top at $159.60.

If the buying is real at current price levels then the rally should extend over $159.60. Increased buying volume could drive the market into $160.90 later today then eventually $162.10.

A failure to sustain a rally over $159.60 will indicate the presence of sellers. It will also mean that today’s earlier rally was fueled by short-covering and buy stops rather than aggressive buying. This isn’t good for the long-term structure of the rally.

Crossing below the nearest downtrending angle at $158.00 will be an indication that the selling pressure is getting stronger. This could drive the market into a key uptrending angle at $157.20. This angle is very important to the structure of the bull market so it must hold as support. If it fails then look for momentum to shift to the downside.

Watch the price action and read the order flow at $159.60 today. Holding above this top will indicate the buying is getting stronger. Falling back below it will mean that sellers are regaining control.