“The cure for high prices is high prices” may finally be catching up with coffee.
The fundamental backdrop has started to soften with better crop prospects in Brazil and improving robusta supply from Vietnam helping to shift the narrative away from the scarcity fears that fuelled coffee’s explosive rally.
Now the price action on the charts is starting to reflect that shift too.
Having bounced from beneath $2.80/lb on several occasions in recent months, bears have finally gotten their way with the price breaking down through $2.7545, the former swing high set in September 2024 that had flipped to support in recent years. Sitting in a strong downtrend having failed again to retest the record highs in October last year, the breakdown suggests there may be more downside to come for coffee.
While the price action is undeniably bearish, accompanied by building downside momentum with RSI (14) trending lower beneath 50 but not yet oversold, a signal confirmed by MACD which has already staged a bearish crossover, the price now finds itself sitting between former support at $2.7545 and $2.645, the swing high set in October 2024 that when eventually broken heralded the start of the bull run towards the record highs.
As such, the preference is to wait for either a bounce, back test and failure at $2.7545 before considering short entries, allowing for a stop to be placed above the level for protection targeting $2.645. Beyond, there are only a series of minor levels to monitor as potential targets before more pronounced support kicks in at $2.04 and $1.1940.
If the latest bearish move extends towards $2.645 without any form of bounce, price action at the level may be informative as to whether it could be used to set a short or countertrend long, allowing for a stop to be placed on the opposite side to entry depending on how the price interacts with the level.
Good luck!
DS
The fundamental backdrop has started to soften with better crop prospects in Brazil and improving robusta supply from Vietnam helping to shift the narrative away from the scarcity fears that fuelled coffee’s explosive rally.
Now the price action on the charts is starting to reflect that shift too.
Having bounced from beneath $2.80/lb on several occasions in recent months, bears have finally gotten their way with the price breaking down through $2.7545, the former swing high set in September 2024 that had flipped to support in recent years. Sitting in a strong downtrend having failed again to retest the record highs in October last year, the breakdown suggests there may be more downside to come for coffee.
While the price action is undeniably bearish, accompanied by building downside momentum with RSI (14) trending lower beneath 50 but not yet oversold, a signal confirmed by MACD which has already staged a bearish crossover, the price now finds itself sitting between former support at $2.7545 and $2.645, the swing high set in October 2024 that when eventually broken heralded the start of the bull run towards the record highs.
As such, the preference is to wait for either a bounce, back test and failure at $2.7545 before considering short entries, allowing for a stop to be placed above the level for protection targeting $2.645. Beyond, there are only a series of minor levels to monitor as potential targets before more pronounced support kicks in at $2.04 and $1.1940.
If the latest bearish move extends towards $2.645 without any form of bounce, price action at the level may be informative as to whether it could be used to set a short or countertrend long, allowing for a stop to be placed on the opposite side to entry depending on how the price interacts with the level.
Good luck!
DS
Feragatname
Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, alım satım veya diğer türden tavsiye veya öneriler anlamına gelmez ve teşkil etmez. Kullanım Koşulları bölümünde daha fazlasını okuyun.
Feragatname
Bilgiler ve yayınlar, TradingView tarafından sağlanan veya onaylanan finansal, yatırım, alım satım veya diğer türden tavsiye veya öneriler anlamına gelmez ve teşkil etmez. Kullanım Koşulları bölümünde daha fazlasını okuyun.