ICE Coffee Stalls At Support For Now -- Technical Analysis

Kira Brecht

  ICE May coffee futures succumbed to heavy selling pressure through the week, but have stalled at

least for now just above a minor chart point and Fibonacci retracement support.

  The near term outlook remains vulnerable, but daily momentum tools are nearing oversold, which

could signal that the current selling phase is nearing a pause.

ICE May coffee recently traded down 10 points at $1.7405 a pound.

  Looking back at recent market action, from late January, ICE May coffee has surged higher,

climbing from a Jan.-28 low at $1.1555 to the March-12 peak at $2.0975. Since hitting that mid March

high, the bears have swooped in to pressure the market sharply lower in a corrective pullback.

  Friday's selling stalled just above the Feb.-26 daily low at $1.7105 and around the 50% Fibonacci

retracement support zone around $1.7195. The retracement was drawn off the early February low to the

March high.

  Daily momentum studies are still pointing lower but have reached or are near oversold levels. The

coffee market may have dropped to a level of demand, which could stabilize the market action.

  Near term, watch the $1.7105-$1.7195 zone. If this holds, coffee could shift into a consolidative

sideways trade. If however, it gives way, look for another selling wave to hit the coffee market.

The 61.8% retracement would stand as the next bearish target around $1.6300 if renewed selling

emerges.

  ICE coffee posted a steep and accelerated rally move throughout February and into early March. A

corrective pullback is not a surprise.

  The weekly May coffee chart reveals the bulls remain on the defensive. The March 14 week formed a

bearish shooting star and this week is shaping up as a large red or bearish candle. But, if the

market can stabilize, a sideways consolidation between roughly $1.7000 and $1.9000 could emerge in

the short-term as the market digests its recent volatile activity