Possible Upside Breakout in CoffeePosted 10/02/2019 9:09AM CT |
December coffee prices continue to trade sideways for the most part. Prices have held support over the 9750 level, likely due to the steady demand for coffee, which has managed to put a sizeable dent in last year’s large supply of Brazil coffee. Once this excess supply of coffee is removed from the market, December coffee prices should begin to stabilize and hold support above the 100 level. However, we’re seeing some serious weakness in the U.S. stock market, and this most recent selloff in the S&P 500 may likely offer a risk-off mentality for many traders. Next week’s weather forecast for major growing areas in Brazil are showing quite favorable, which really helps to keep rallying December coffee prices in check. Our friends at The Hightower Group previously reported, “with global demand showing signs of improvement, the market may be set for another leg up”.
The December coffee price action is beginning to form a symmetrical continuation pennant. With a potential break above the apex of the triangle (located at approximately at or about the 102 level), we could see an upward breakout and run to the 108 level. We will closely monitor this level.