Ample world coffee supply expectations weigh on the coffee market. Will the coffee prices continue declining?
Coffee prices are under pressure as favorable weather conditions in the main countries of production indicate the growing global supply. Brazil rainfall reports in most of the coffee districts support the view of the abundant 2019 crop in the top world producer country. Farmers in Vietnam, second largest world coffee producing country, complain of falling profits as prices decline. And in Indonesia, the fourth biggest coffee producer, supplies from the mini harvest in the southern part of Sumatra this week rose 10-15 percent from last week, according to Reuters. Expectations of ample global supply are bearish for coffee prices.
On the daily timeframe the Coffee: D1 is below the 50-day moving average MA(50) which is falling, this is bearish.
- The Parabolic indicator gives a sell signal.
- The Donchian channel indicates downtrend: it is narrowing down.
- The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
- The RSI oscillator is rising but has not breached into overbought zone yet.
We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 95.51. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the last fractal high at 99.54. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop loss level (95.51) without reaching the order (99.54), we recommend canceling the order: the market has undergone internal changes which were not taken into account.
Technical Analysis Summary
- Position Sell
- Sell stop Below 95.51
- Stop loss Above 99.54
Market Overview
- Technology rally leads US stocks higher
- Dollar strengthens as Philadelphia Fed index recovers
US stock market rebounded on Thursday led by technology. The S&P 500 rose 1.1% to 2854.88 led by 3.7% Apple (NASDAQ:AAPL) surge on analysts’ upgrade. The Dow Jones industrial average advanced 0.8% to 25709.94. Nasdaq composite index rallied 1.4% to 7630.91. The dollar weakening stalled as the Philadelphia Fed’s business activity index rebounded in March indicating improving conditions. The live dollar index data show the ICE US Dollar index, a measure of the dollar’s strength against a basket of six rival currencies, rose 0.4% to 96.31 but is lower currently. Futures on US stock indexes point to mixed openings today.
FTSE 100 rise as EU agrees to Brexit delay
European stocks ended marginally lower on Thursday. EUR/USD joined GBP/USD’s slide as the Bank of England held interest rates steady, as widely expected. Both pairs are higher currently. The Stoxx Europe 600 index slipped 0.04%. Germany’s DAX 30 lost 0.5% to 11549.96. France’s CAC 40 slid 0.1% while UK’s FTSE 100 advanced 0.9% to 7185.43 as European Union agreed to postpone Britain’s March 29 departure to May 22 if the UK parliament approves Prime Minister Theresa May’s amended deal with the EU next week. In case of another rejection, Britain will have until April 12 to “indicate a way forward.”
Asian indices inch higher
Asian stock indices are mostly higher today. Nikkei ended 0.1% higher at 21627.34 with yen little changed against the dollar. China’s stocks rose as Beijing confirmed Thursday that US Trade Representative Lighthizer and Treasury Secretary Mnuchin will visit China on March 28-29, while Chinese Vice Premier Liu He will travel to Washington early next month to continue the negotiations. The Shanghai Composite Index rose 0.1% and Hong Kong’s Hang Seng Index is 0.1% higher. Australia’s All Ordinaries Index extended gains 0.5% with Australian dollar flat against the greenback.
Brent retraces up
Brent futures prices are gaining today. Prices declined yesterday: Brent for May settlement closed 0.9% lower at $67.86 a barrel on Thursday.