Speaking on the coronavirus, China’s Xi was quoted as saying, “the virus is a devil and we cannot let the devil hide”. Some very realistic concerns have surfaced regarding a widely reduced demand from China due to the ongoing coronavirus, which has easily sparked more continued selling pressure on March coffee prices. Coffee was already suffering some selling pressure due to a large Brazilian supply on the horizon.
Our friends at The Hightower Group shared that “coffee prices are at bargain levels already, but there is no major fundamental reason for the market to turn higher.”
For any type of rebound (or even support in the near term), traders must hear some good news in regard to China’s ability to stabilize and slay this “devil”.
From a technical perspective, we have violated the 10580 critical support level and now the 100 level is hoping to hold as somewhat psychological support. I believe this market to be extremely oversold, and with the slightest bit of good news related to the coronavirus, it is due for a strong bounce back.