ICE Coffee Futures (KC) Technical Analysis – December 7, 2016 Forecast

March ICE Coffee futures fell sharply on Tuesday, extending the sell-off that began at $179.55 on November 8. The selling pressure is being driven by Brazilian farmer selling due to the stronger U.S. Dollar and supply and demand figures that point to higher-than-expected supply in the current season.

There is not much traders can do about the supply and demand situation, but we could see a quick turnaround if the dollar starts to weaken. That’s all we can count on right now.

Technical Analysis

The main trend is down according to the daily swing chart. The market is not in a position to change the main trend to up, but we are in the window of time to post a potentially bullish closing price reversal bottom.

The next target is the August 17 bottom at $141.10. This is followed by the June 27 main bottom at $140.35 and the June 13 main bottom at $138.85.

The main range is $126.00 to $179.55. Its retracement zone is $146.45 to $152.80. The market is currently trading below this zone, putting the market in a bearish position. This zone is controlling the longer-term direction of the market.

Forecast

Based on the current price at $143.00, the direction of the coffee market is likely to be determined by trader reaction to the long-term uptrending angle at $145.00.

Overcoming $145.00 will indicate the presence of buyers. This could drive the market into the major Fib level at $146.45. This price level is a potential trigger point for an acceleration into the major 50% level at $152.80.

A sustained move under $145.00 will signal the presence of sellers. This could drive the market into the downtrending angle at $139.55. Crossing to the weak side of this angle will put coffee in an extremely bearish position with the next target angle coming in at $135.50.

Watch the price action and order flow at $145.00 today. Trader reaction to this angle will tell us if the buyers are finally showing up after disappearing for nearly a month. The catalyst behind a rally today could be a weaker U.S. Dollar.