I was as giddy as a little school girl today as December Coffee futures tagged a long term key level area of 101 and buyers came in fast and furious.
Coffee had already tested and pulled above. Today was another test resulting in a reversal daily hammer candle. If we run the Fibonacci levels from the high of 192 two years ago, the first major level (23%) lines up perfectly with what is visual horizontal resistance at $121.30. The daily MACD is drifting up and the RSI is coming off of extreme oversold levels.
Long December Coffee
Target Profit $121.29
Stop Loss $101
Move SL to Break Even once price reaches $106.6
Adding to the technical setup, turmoil in South America is ramping up even further. Argentina’s currency crisis deepened on Thursday as an emergency interest-rate increase to 60 percent failed to stop jittery investors from pulling their money out of the country. Brazil has now deployed armed forces to its borders in an effort to keep refugees from flowing into the country as a result of inflationary economic conditions.
The region runs the risk of increased strain and adds to risk of future crop production supply adding to the bullish case for coffee. This and the very clear technical setup has Wags doing a little dance in excitement.