Arabica coffee term 12/2022 (KCEZ22) could not maintain the upward momentum, reversed to decrease before the US CPI information was announced, down 3.75 cents (-1.64%), the price closed the old session at 224.75 cents /lbs.
The dollar continued to correct downwards to a 2-week low against a basket of currencies and commodities as the market awaits the US CPI data to be released tonight with expectations of lower inflation. US stocks and gold also rallied before the weakening of the dollar. The real added 0.97% and is currently trading around 1 USD = 5.0970 BRL. This exchange rate is no longer attractive enough for Brazilian farmers to sell their goods.
The news of rain in some parts of Brazil and the forecast that it will continue to rain in the next 2 weeks has helped the market to ease concerns about dry weather in key coffee growing regions in Brazil. The price of Arabica therefore also lost its bullish support and fell more strongly than the drop of coffee on the London floor.
According to technical analysis, RSI is at the average of 50% but MACD has converged and is turning down, so in the short term, the bearish momentum of Arabica coffee is still with the near support area at 220-221.
Depending on the CPI data tonight and the US monetary policy next week, Arabica prices may have a new direction out of the recent price range.
If the price breaks through 220, it can trigger a deep drop to the 214-215 or even 210 zone. On the contrary, the price needs to rise above 235 to continue the rally to find new resistance.
HINTS BUY/SELL STRATEGY IN THE Session (refer).
NEW BUYING CL:
- Support zone 1: 222 – 222.5 cents
- Support zone 2: 220-220.5 cents
- Stop Loss: 216 cents
CL SELL DOWN:
- Resistance zone 1: 228.5 – 229 cents
- Resistance zone 2: 232-232.5 cents
- Stop Loss: 235 cents
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