May coffee is looking to garner support with a very large swing from the 50-day moving average around the 128 level, up to the 137 level. Since bouncing directly off the 50-day MA (on March 9th of this year), we can also see a failed outside-day (down) pattern followed by a massive rally. RSI levels are not yet at overbought levels, and volumes are high.
Due to ongoing dry weather in key growing areas of Brazil, we can expect the new crop 21/22 to have some supply side shortage issues which should continue to support higher May coffee prices. In addition, demand is continuing to pick up in the US, with stocks rallying to new highs by the day.
We can expect continued support for the foreseeable future, and new buyers should wait for another pullback to the 1.31 level (25-day moving average) to ride another leg higher.
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