Arabica Coffee Technical Analysis - Arabica Coffee Trading: 2015-11-19

Reduced coffee shipments

A few days ago coffee prices have hit a fresh annual minimum. Meanwhile, some agricultural agencies note its export from Brazil has decreased. Shall we expect the coffee to retrace?

The Brazilian CEPEA (Center for Advanced Studies on Applied Economics) has reported the contracted shipments of coffee from Brazil in 2015/16 season, or in Jul-Sept of current year, by 4.5%. According to Coffee Exporters Council, in the same period the shipments contracted by 10.9mln 60kg bags which is 2.7% less than last season. In October 2.93mln bags were dispatched from Brazil which is 5.2% less than in October 2014. The additional positive factor may come from the Harvard University study. According to it, coffee may help reduce risk of Parkinson’s and other diseases.

On the daily chart Coffee: D1 is within the downtrend. No technical signals to buy are given. The Bollinger bands have contracted which may mean lower volatility. The bullish momentum may develop in case the coffee surpasses the last fractal high and upper Bollinger band at 125. The level may serve the point of entry. The initial risk-limit may be placed below the Parabolic signal, Bollinger band and the last fractal low at 114. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 114 without reaching the order at 125, we recommend cancelling the position: the market sustains internal changes which were not taken into account.