Coffee Arabica speculators who like to follow momentum certainly enjoyed a dynamic ride this past week. After opening trading near the $315.00 vicinity and moving towards a high above $337.00 on Wednesday, Coffee Arabica then began to see its price fall.
Coffee Arabica has shown strong speculative influence the past month and a half and price action the past handful of days continues to demonstrate the influence of speculative buying even as supply remains plentiful.
Day traders had to deal with a price differential that was around $22.00 this past week in Coffee Arabica, which in historical terms for the commodity remains within polite territory. Yet, the tendency to believe that Coffee Arabica should be cheaper than it is currently charting may be having an adverse result on people who are betting for a fall in price. Because even though reports of solid crop numbers persists for Coffee Arabica, influences continue to keep the price in higher terrain.
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Speculative Buying Influences Strong in Coffee Arabica
While bearish speculators may be looking for reasons why Coffee Arabica is going against their predicted paths, buyers who have followed bullish momentum may be profiting. The price of Coffee Arabica finished at a higher ratio than it did in the previous week. Wagering on lower momentum to suddenly emerge in Coffee Arabica may be tempting, but support around the $316.00 mark became a factor early on Monday and lasted into Tuesday, then a strong buying surge hit culminating in apex prices upwards on Wednesday.
As selling transpired on Thursday and Friday it needs to be highlighted that the $320.00 realm held as support on Thursday and the $321.00 mark proved durable on Friday. As tomorrow’s price action starts Coffee Arabica traders looking for downside will likely use the short-term support ratios as a guideline. But the higher finish this past week is a sign speculators are still in control of the Coffee market, in fact buying action has also been seen in another major soft commodity – cocoa – since late July.
Looking for Lower Price Action in Coffee Arabica
While it might be tempting to believe lower price dynamics will develop, the difficult part is timing the downturn.
Coffee Arabica looks expensive, but the higher price touched this past week was a monthly technical high.
In mid-July Coffee Arabica did traverse higher and some speculative forces may have enough power to try and create another test of prices above $340.00 and perhaps even to $350.00.
Sellers of Coffee Arabica should remain cautious regarding their wagers on lower price action for the moment.
Sustained price action has to be seen below $300.00 before the current values in the commodity can be treated as a bullish cycle that has ended – this has not happened yet.
Coffee Weekly Outlook:
Speculative price range for Coffee Arabica is $299.00 to $339.00
Brazil’s crop output numbers cannot be disputed, production was good and supply appears to be ample. However, for the moment Coffee Arabica is not under the influence of bearish clouds, instead buyers are continuing to create strong pricing. However, bearish thoughts will continue to look at Coffee Arabica and believe eventually the price will lower. The rather polite price range in Coffee Arabica shows there hasn’t been a lot of pressure displayed, nor panic.
The upwards traction and lack of a test downwards does show buyers in control of the marketplace. When that is going to change remains the challenge for those looking for lower values. The first target regarding support is $320.00, followed by $315.00. If these two levels get tested early this week and movement is lower than a bearish streak may develop in force. Yet, signs of this happening have not been demonstrated yet, speculative strong forces may try to propel Coffee Arabica upwards a little while longer to see if they can muster another attack on higher elevations seen in July.
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