ICE Coffee Falls to Test Important Support -- Technical Analysis
Kira Brecht
ICE March coffee futures are pressing lower again on Thursday, as the recent selling spree
continues. The contract is approaching a test of major support from the Jan. 5 low at $1.6010. The
trend outlook is bearish, but coffee has fallen sharply over the past four sessions, which leaves
the market vulnerable to a consolidation or correction.
ICE March coffee recently traded down 65 points t $1.6060 a pound.
Action in recent months has seen the bears dominate in the coffee market. ICE March coffee futures
fell from a peak at $2.2910 in mid October to the Jan. 5 low at $1.6010. A minor counter-trend rally
move developed off the early January low, which stalled out at $1.8490, the Jan. 12 daily high. That
ceiling is now an important swing high resistance zone for coffee.
The bears swooped in decisively on Jan. 15 and four days of heavy selling pressure ensued. Now,
the coffee market has dropped back toward the early January low at $1.6010 and for now is holding
just above that support zone.
The moving average outlook is bearish for ICE March coffee, as the contract is trading below all
significant moving averages from the 20-day to the 200-day. That position is generally viewed as a
bearish signal by the trend following crowd.
A look at the monthly continuation chart for ICE coffee reveals that the market is closing in on a
test of important support at $1.5780, the July 2014 monthly continuation low. That marks the lower
border of a large choppy range that confined coffee for much of 2014. That is a significant support
floor and if it were to give way would be strong bearish implications.
Shifting back to the daily March chart, daily momentum studies are approaching or have already
reached oversold territory, which could open the door for a short-term consolidation period around
the daily chart support at $1.6010. But, if that floor gives way, coffee will be vulnerable to a
test of the $1.5780 zone seen on the monthly continuation chart.
The trend is bearish. But, the market has fallen swiftly in recent days and is vulnerable to a
consolidation period. On the monthly continuation chart, coffee sees major support at the $1.5780
area. If the bears sustained a strong downside breakout below that zone in the days ahead it would
open the door to a potentially significant slide in coffee prices. A measured move target would
project the potential for significant multi-day to multi-week declines.
continues. The contract is approaching a test of major support from the Jan. 5 low at $1.6010. The
trend outlook is bearish, but coffee has fallen sharply over the past four sessions, which leaves
the market vulnerable to a consolidation or correction.
ICE March coffee recently traded down 65 points t $1.6060 a pound.
Action in recent months has seen the bears dominate in the coffee market. ICE March coffee futures
fell from a peak at $2.2910 in mid October to the Jan. 5 low at $1.6010. A minor counter-trend rally
move developed off the early January low, which stalled out at $1.8490, the Jan. 12 daily high. That
ceiling is now an important swing high resistance zone for coffee.
The bears swooped in decisively on Jan. 15 and four days of heavy selling pressure ensued. Now,
the coffee market has dropped back toward the early January low at $1.6010 and for now is holding
just above that support zone.
The moving average outlook is bearish for ICE March coffee, as the contract is trading below all
significant moving averages from the 20-day to the 200-day. That position is generally viewed as a
bearish signal by the trend following crowd.
A look at the monthly continuation chart for ICE coffee reveals that the market is closing in on a
test of important support at $1.5780, the July 2014 monthly continuation low. That marks the lower
border of a large choppy range that confined coffee for much of 2014. That is a significant support
floor and if it were to give way would be strong bearish implications.
Shifting back to the daily March chart, daily momentum studies are approaching or have already
reached oversold territory, which could open the door for a short-term consolidation period around
the daily chart support at $1.6010. But, if that floor gives way, coffee will be vulnerable to a
test of the $1.5780 zone seen on the monthly continuation chart.
The trend is bearish. But, the market has fallen swiftly in recent days and is vulnerable to a
consolidation period. On the monthly continuation chart, coffee sees major support at the $1.5780
area. If the bears sustained a strong downside breakout below that zone in the days ahead it would
open the door to a potentially significant slide in coffee prices. A measured move target would
project the potential for significant multi-day to multi-week declines.
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