ICE Coffee Futures (KC) Technical Analysis – September 23, 2016 Forecast

December ICE Coffee (Arabica) futures are trading lower after forming a dramatic closing price reversal top on Thursday. Most of the selling pressure is related to profit-taking ahead of the week-end.

Traders are saying that speculators are exiting long positions following reports of bigger offers from coffee growing regions as producers in those areas make space for the next harvest. In other words, producers who have been holding on for higher prices, finally got their wish earlier in the week and are now taking advantage of it.

In Brazil, the largest growing region, Volcafe said producers and cooperatives continue to offer large volumes of medium to lower quality Arabica beans.

TECHNICAL ANALYSIS

The main trend is up according to the daily swing chart. However, Thursday’s closing price reversal top at $160.90 and the subsequent confirmation on Friday, have confirmed that momentum has shifted to the downside.

The top at $160.90 fell short of the April 22, 2015 main top at $162.10.

The short-term range is $147.40 to $160.90. Its retracement zone at $154.15 to $152.60 is the primary downside target. This zone is currently being tested.

FORECAST

BASED ON THE EARLY PRICE ACTION, THE DIRECTION OF THE DECEMBER ICE COFFEE FUTURES CONTRACT WILL BE DETERMINED BY TRADER REACTION TO THE SHORT-TERM RETRACEMENT ZONE AT $154.15 TO $152.60.

A SUSTAINED MOVE OVER $154.15 WILL INDICATE THAT BUYERS ARE COMING IN TO SUPPORT THE MARKET. THIS COULD TRIGGER ENOUGH UPSIDE MOMENTUM TO TEST A STEEP DOWNTRENDING ANGLE AT $156.90.

ON THE DOWNSIDE, THE KEY AREA TO WATCH IS THE SUPPORT CLUSTER AT $152.60 TO $152.40. TAKING OUT $152.40 COULD TRIGGER AN ACCELERATION INTO A PAIR OF UPTRENDING ANGLES AT $150.85 AND $149.90.

SINCE THE MAIN TREND IS UP, IT IS IMPORTANT TO WATCH THE PRICE ACTION AND ORDER FLOW INSIDE THE $154.15 TO $152.60 RETRACEMENT ZONE. BULLISH TREND TRADERS ARE GOING TO TRY TO BUY COFFEE IN AN EFFORT TO PRODUCE A POTENTIALLY BULLISH SECONDARY HIGHER BOTTOM.

BEARISH TRADERS ARE GOING TO TRY TO TAKE OUT THIS RETRACEMENT ZONE IN AN EFFORT TO SOLIDIFY THE IMPORTANCE OF THE $160.90 MAIN TOP.