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

December ICE Arabica coffee futures fell early Wednesday in response to general weakness across the board as investors reacted to uncertainty over the outcome of the U.S. election. Commodity funds trimmed positions after open interest explode to record levels. There were no changes in the traditional supply/demand fundamentals but investors used the chaos created by the election as an excuse to book profits after a recent rally sent prices to multi-year highs.

The Brazilian Real also tumbled as Donald Trump’s victory in the U.S. presidential elections caught traders off-guard. A weaker real is seen as bearish for coffee, making prices more attractive in local currency terms in the world’s top exporter of both commodities.

In other news, Brazil’s coffee exporters association Cecafe said on Wednesday that green coffee exports totaled 2.89 million 60-kg bags in October, down 10 percent from 3.21 million in the same month last year. Arabica exports were up 1.3 percent at 2.88 million bags but robusta exports dropped 97 percent to 9,833 bags.

Coffee rebounded from earlier losses on increased demand for higher risk assets after President-elect delivered a market calming speech that called for unity.

Technical Analysis

The main trend is down according to the daily swing chart. A trade through $176.00 will signal a resumption of the uptrend. A move through $160.35 will change the main trend to down.

The main range is $145.20 to $176.00. Its retracement zone at $160.60 to $157.00 is the primary downside target.

The intermediate range is $160.35 to $176.00. Its retracement zone is $168.20 to $166.35. This zone is support today.

The short-term range is $176.00 to $163.20. Its retracement zone is $169.60 to $171.10. This zone is currently being tested. It is very important to the structure of the market. Sellers are going to try to form a secondary lower top inside this zone. Buyers are going to try to take it out in order to make $163.20 a new main bottom.

Forecast

Based on the close at $170.10, the direction of the coffee market today will be determined by trader reaction to the short-term retracement zone at $169.60 to $171.10.

A sustained move over $171.10 will indicate the presence of buyers with the next target angles coming in at $172.00 and $174.00. The best target is a resistance cluster at $174.95 to $175.00. This is the last potential resistance area before the $176.00 main top.

A sustained move under $169.60 will signal the presence of sellers. The initial break should take the market into a pair of uptrending angles at $169.35 and $169.20.

Taking out $169.20 could drive the market into the 50% level at $168.20. The daily chart opens up further to the downside under $168.20 with the next target a support cluster at $166.35.

A break through $166.35 will do serious damage to the chart. This could drive the market into yesterday’s low at $163.20.

Look for a bullish tone to develop on a sustained move over $171.10 and a bearish tone on a sustained move under $169.60.