Coffee: Crucial Resistance Level Ready to Test Speculators

Robert Petrucci

A solid bullish trend has developed the past week of trading in coffee, and it is challenging important resistance levels which may prove crucial.

Coffee is near important resistance levels which have produced a sharp reversal downwards in the middle of November. The price of coffee this morning is near the 123.30 vicinity and speculative forces will be keen to watch its movements closely. The price of coffee has proven able to climb the past week after being peppered by selling positions before. The commodity again is challenging price levels which it approached in late August and did manage to reach a high of nearly 134.05 in early September.

Experienced commodity traders know that coffee's price can move fast, and limit orders need to be used along with other risk management tools so sudden spikes do not decimate trading accounts. However, risk takers may continue to be enticed by coffee and the notion that its current values are approaching levels the commodity tested last year at this time, and as recently as August.

From a technical perspective, if coffee can break through the resistance levels which it is now approaching, there may be solid ground to produce more momentum higher. Speculative forces in coffee certainly have their eyes on prices which reached the 132.00 to 134.00 price levels late last year and in the late summer of this year. The third time may prove to be the charm for bullish sentiment in coffee after two previous failed attempts to charter new value highs which it has not traversed in over three years.

Traders who want to pursue reversals lower can use current resistance levels as stop loss ratios, but they must also be willing to wager against a relatively strong bullish trend. Yes, resistance levels around coffee’s current price levels have produced downward movements before. But if the commodity challenges the 125.00 juncture and punctures it higher and is able to trade near the 126.00 mark, another speculative buying spree may be triggered quickly.

Short-term risk appetite appears to be steady in the commodity markets, and coffee has enjoyed a rather steady bullish trend, which may not be ready to end near term. Speculators may continue to favor buying the commodity and target current resistance levels favorably at take profit junctures. Coffee may be ready, however, to break through current resistance levels and challenge higher values. Traders need to remember the large amount of volatility which can strike quickly within the commodity and pay attention to their positions closely.

Coffee Short-Term Outlook:

  • Current Resistance: 124.10
  • Current Support: 122.45
  • High Target: 125.30
  • Low Target: 119.60

Coffee

Robert Petrucci
Robert Petrucci has worked in the Forex, commodity, and financial profession since 1993. Important aspects of his work involve risk analysis and advisory services. As an advisor in a Family Office he maintains a conservative approach for wealth management and investments. Robert also works in private finance with investors and companies delivering financial and management services.

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