September Coffee Violates SupportPosted 08/08/2019 1:51PM CT |
Coffee prices seem to be holding support, likely due to a strong bounce back in corrective action from U.S. stocks. There has also been talks of weather that may not be favorable to the upcoming crop in the second largest producing country, Vietnam. In fact, our friends at The Hightower Group have 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 may help to support coffee prices, while a rallying US stock market could bode well for a break above resistance levels, as the September E-mini S&P 500 fights to hold ground above the 2900 level.
The recent violation of the June 19th low of 9625 is bearish. Typically, we will see a violation of such support areas, followed by a sizeable return move and strong correction (especially in the case of coffee prices, which can be extremely volatile at times). Technically, I would expect follow through selling to take place over the next few days, in a big way. Look for September coffee prices to resume the downtrend with a visit back down to the lows we saw back in May of this year.