Commodities

Technical Analysis – Coffee futures find strong resistance at 1.2456; further losses are expected

Posted on June 29, 2018 at 1:43 pm GMT

Melina Deltas, XM Investment Research Desk

Coffee futures for September have reversed to the downside over the previous two days after printing a 20-day high of 1.1897, which holds near the 40-simple moving average (SMA) in the daily timeframe.

From the technical point of view, the Relative Strength Index (RSI) is increasing the negative momentum as it lies below the neutral threshold of 50 and is approaching the 30 level. Moreover, the MACD oscillator holds above the trigger line but is strengthening its bearish structure.

If the price continues the downside pressure, the next level to have in mind is the latest low of 1.1339, taken from the trough on June 19. Further losses would push the commodity until the return line of the downward sloping channel around the 1.1000 psychological level.

However, if the market manages to pick up speed, the 40-SMA could offer nearby resistance ahead of the 1.1897 hurdle. A significant close above the latter would touch the descending trend line around 1.2100, raising chances for further increases. In this case, prices could climb above the channel towards the 1.2456 obstacle.

To sum up, Coffee futures have been developing within a downward sloping channel since November 2017 and failed several times to surpass it in the previous couple of months.

Coffee futures commodities

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