Technical Analysis #C-COFFEE : 2019-10-31

[IFC Markets]

Lower output expectations bullish for coffee price
Vietnam’s coffee production fell in October. Will the coffee prices continue rising?

Vietnam’s coffee production is down: the General Statistics office in Vietnam estimates country’s coffee exports at approximately 1.67 million bags for the month of October, bringing total exports for the first ten months of this year at 22.75 million bags, 13.8% lower than the same period last year. Lower production is bullish for coffee price.

On the daily timeframe the COFFEE: D1 is above the 200-day moving average MA(200) which is declining .

• The Parabolic indicator gives a buy signal.
• The Donchian channel indicates no trend: it is flat.
• The MACD indicator gives a bullish signal: it is above the signal line and the gap is widening.
  
• The RSI oscillator is rising but has not reached the overbought zone.

We believe the bullish momentum will continue as the price breaches above the upper Donchian boundary at 104.17. A pending order to buy can be placed above that level. The stop loss can be placed below the lower Donchian boundary at 94.22. 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 (94.22) without reaching the order (104.17), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary


Order Buy
Buy stop Above 104.17
Stop loss Below 94.22