March Coffee Looking Strong

January 19, 2017 7:08AM CST

In spite of some recent strength in the US dollar, we’ve seen March coffee prices rally over the last week or so. Many traders are a bit apprehensive about initiating new long positions due to a forecast of significant wet weather headed for major growing areas of Sumatra.  We should know more over the next two days. La Nina may be producing some good numbers in Indonesia after a sluggish production.

Technically, we’ve been able to clear a critical high of 14525 from December 20 th .  This area should have posed strong resistance but since March coffee prices have cleared this area, we’ve seen 5 out of the last 7 trading sessions go positive. In the near term, we could see a strong pullback in the price action, down to this level. We won’t yet call a bottom on a market that has been free falling since November of this year. Traders should look to initiate a buy with a pullback to the 14500 level, use options to allow time, and manage risk.

Daily chart of March Coffee

Source: RJO Futures Pro

Coffee Daily

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