Weather and fungus outbreak concerns are bullish for coffee prices
Cold seasonal weather in Brazil and coffee rust outbreak in Honduras may negative affect coffee supply. Will coffee prices continue rising?
On the daily timeframe the COFFEE:D1is rising after hitting 15 month low three weeks ago. Price has risen above the resistance line but is below the 50 -day moving average MA(50).
- The Parabolic indicator gives a buy signal.
- The Donchian channel gives no signal: it is flat.
- The MACD indicator is neutral: no gap has developed with the signal line.
- The stochastic oscillator is falling but has not reached the oversold zone yet.
We believe the bullish momentum will continue after the price crosses above the MA(50) and the upper Donchian bound at 131.92. It can be used as an entry point for a pending order to buy. The stop loss can be placed below the last fractal low at 123.55. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop-loss level (123.55) without reaching the order (131.92) we recommend cancelling the position: the market sustains internal changes which were not taken into account.
Summary of technical analysis:
| Position | Buy |
| Buy stop | Above 131.92 |
| Stop loss | Below 123.55 |