SINGAPORE: New York coffee may test a resistance at $1.2675 per lb this quarter, a break above which could lead to a gain to the next resistance at $1.5090.
These resistances are identified respectively as the 50 percent and the 38.2 percent projection levels of a downward wave C from $2.2910.
This wave was disrupted by a strong support at $1.0255 which caused the current bounce. A falling channel indicates a bounce target around $1.2675.
It is not very clear that the wave C has completed. A break above $1.2675 could suggest the completion of this wave and a higher target at $1.5090 will be established.
However, it could be extremely difficult for coffee to break $1.2675, as a falling trendline will also exert a strong resistance slightly above this level. A decent correction or a resumption of the downtrend could be observed when coffee approaches the trendline.
A break below $1.0255 could simply suggest the continuation of the downtrend towards $0.7265.
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Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.
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