Coffee prices continue to resume a downtrend that has been in place since July 5th. However, with the U.S. dollar now facing strong resistance at the 9900 level, and a potential double-top reversal down, the Brazilian currency is finding some good support and thus we may likely see a bounce in coffee prices in the near term.
In my last article, I noted that our friends at The Hightower Group had reported that “Vietnam’s Central Highlands growing region is forecast to receive 20% to 40% less rain than normal this month, with temperatures expected to be slightly above average.” These weather concerns in Vietnam have not seen much reported improvement and may also continue to help support higher coffee prices.
There may likely be a strong case for a key reversal up. Yesterday’s low of 8960 sparked strong buying support, which pushed September coffee to end on the day’s highs. Subsequently, we’ve seen a strong overnight rally, with momentum levels trending higher and diverging from the falling price action. This could signal a strong move higher in the near term.