Arabica coffee term 12/2022 (KCEZ22) continued to decline but the rate of decline weakened, down 0.15 cents (-0.08%), the price closed the old session at 190.90 cents/lbs.
The market thinks that the Fed may reduce the rate of interest rate increase to 0.5% in the monetary policy meeting next month instead of 0.75% previously predicted. This caused the USD to decrease by 0.63%, the cash flow was divided when pouring into the G7 foreign currency basket and a number of commodities, agricultural products and coffee were abandoned by the cash flow, so they continued to be dyed red. The Brazilian Real continues to rise against the USD, currently trading around 1 USD = 5.1645 BRL. This has somewhat restrained the selling momentum of producers, Arabica prices also decreased slightly compared to Robusta.
There is a high possibility that speculators take advantage of monetary factors and inventory data to make coffee prices when they sell without mercy, forcing coffee prices to drop continuously. Arabica is at the lowest level in the past 13 months and has not shown signs of improvement even though the price has been in the oversold area for a long time.
According to technical analysis, the RSI is deeply in the oversold area of 26.48% and the MACD shows bearish momentum. It is expected that in the short term, the price may continue to drop to the support zone of 185-187. However, it is not possible to rule out the possibility that a technical recovery will soon occur because the price has entered the oversold area quite deeply. Customers need to keep a safe proportion of cash, avoid selling and chasing after opening a new SHORT position in this low price range and when there is an upward correction, it is an opportunity to reduce the unfavorable LONG position.
HINTS BUY/SELL STRATEGY IN THE Session (refer).
NEW BUYING CL:
- Support zone 1: 187 – 187.5 cents
- Support zone 2: 183.5 – 184 cents
- Stop loss: 180 cents
CL SELL DOWN:
- Resistance zone 1: 194.5 – 195 cents
- Resistance zone 2: 196.5-197 cents
- Stop Loss: 201 cents
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