ICE Coffee Futures (KC) Technical Analysis – August 19, 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 is also to the downside. However, short-sellers should be aware that today’s session begins with coffee in a position to post a potentially bullish closing price reversal bottom.

RETRACEMENT ZONES

The main range is 125.50 to 157.65. The market is currently testing this zone. Taking out the lower or Fib level at 137.80 will put coffee in a bearish position. Overtaking the upper or 50% level at 141.60 will shift momentum back to the upside.

The short-term range is 147.90 to 137.85. Its retracement zone at 142.90 to 144.05 is the primary upside target today. Overtaking this area will indicate the upside momentum is getting stronger. Sellers are going to try to form a new secondary lower top on a test of this range.

The intermediate range is 157.65 to 137.85. Its retracement zone at 147.75 is another potential target.

GANN ANGLES

On the upside, the first Gann angle is a short-term downtrending angle at 143.90. This angle pierces a short-term retracement zone. Overtaking it could trigger a surge into another downtrending angle at 145.15. This is followed closely by another short-term downtrending angle at 145.65.

On the downside, the most important support angle is the long-term uptrending angle at 139.50.

WHAT TO DO TODAY

December ICE Coffee found support inside a key long-term retracement zone earlier in the week as expected. This is a normal move because short-sellers tend to take profits and aggressive counter-trend buyers tend to believe the zone represents a value area and a good place to buy.

Since the main trend is down, we’ll be looking for a shorting opportunity on this rally. The best resistance area is the short-term retracement zone at 142.90 to 144.05. A downtrending angle at 143.90 passes through this zone, making it a valid upside target also.

The high risk trade today would be a buy at the longer-term uptrending angle at 139.50. Its counter-trend, but the angle is inside the major retracement zone at 141.60 to 137.80 so it is a valid support level.