fb#C-COFFEE Price Forecast | Worsening weather can reduce coffee yields | IFCM UK

Technical Analysis #C-COFFEE : 2020-10-28

Recommendation for COFFEE:

Buy
Strong SellSellNeutralBuyStrong Buy

Above 110

Buy Stop

Below 104,9

Stop Loss

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Senior Analytical Expert
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IndicatorValueSignal
RSI Buy
MACD Buy
MA(200) Neutral
Fractals Neutral
Parabolic SAR Buy
Bollinger Bands Neutral

Chart Analysis

IFC Markets Tech Analysis

On the daily timeframe, Coffee: D1 breached up the downtrend resistance line. A number of technical analysis indicators formed signals for further growth. We do not rule out a bullish move if Coffee rises above the last maximum: 110. This level can be used as an entry point. We can place a stop loss below the Parabolic signal, the lower Bollinger line and the last lower fractal: 104.9. After opening a pending order, we can move the stop loss to the next fractal low following the Bollinger and Parabolic signals. Thus, we change the potential profit/loss ratio in our favor. After the transaction, the most risk-averse traders can switch to the 4-hour chart and set a stop loss, moving it in the direction of the bias. If the price meets the stop loss (104.9) without activating the order (110), it is recommended to delete the order: some internal changes in the market have not been taken into account.

Fundamental Analysis

A drought in Brazil could lead to lower crop. Will the Coffee quotes grow ?

The Brazilian agency Somar Meteorologia reported that the state of Minas Gerais received only 62% of the historical rainfall for this time of year. This state is Brazil's main Arabica coffee growing region. At the same time, the Vietnamese National Center for Hydro Meteorological Forecasting reported flooding in the Central Highland area and damage to robusta coffee trees due to Typhoon Molave. US Climate Prediction Center forecasts a drought in Brazil in Q4 this year, with the natural phenomenon of La Nina emerging. Earlier, Coffee's quotes fell by almost a third due to the forecast of the Brazilian agency Conab’s forecast of a 38% increase in harvest this year to 47.4 million bags. If this estimate is revised downward due to drought, an upward correction is possible.

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