Technical analysis: Will the coffee price continue rebounding?

Dmitry Lukashov IFC Markets

Recommendation for COFFEE: Buy

Buy Stop: Above 179.11.

Stop Loss: Below 149.63.

RSI: Sell.

MACD: Buy.

Donchian Channel: Buy.

MA(200): Buy.

Fractals: Neutral.

Parabolic SAR: Buy.

Chart analysis

The #C-COFFEE technical analysis of the price chart in daily timeframe shows #C-COFFEE, Daily is rebounding above the 200-day moving average MA(200), which is rising itself. We believe the bullish momentum will continue as the price breaches above the upper Donchian boundary at 179.11. A pending order to buy can be placed above that level. The stop loss can be placed below 149.63. After placing the order, the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level without reaching the order, we recommend canceling the order: the market has undergone internal changes which were not taken into account.

Fundamental analysis

Unusual cold snap appears to have caused significant damage to Brazil’s coffee plantations. Will the COFFEE price continue rebounding? Stronger than expected cold snap yesterday has damaged coffee trees in Cerrado region which includes Minas Gerais, Brazil’s largest coffee producing state. With this year’s crop mostly harvested and not expected to be impacted by the cold snap, analysts try to gauge the degree of damage to 2022 crop, with estimates ranging from one third to half of next year crop. Brazil is the top coffee producer in the world. Expectations of lower crop are bullish for coffee price.

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Author

Dmitry Lukashov

IFC Markets

Dimtry Lukashov is the senior analyst of IFC Markets. He started his professional career in the financial market as a trader interested in stocks and obligations.

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