Technical comment: The coffee remains strongly depressed by the bears, with the price down in a long-term downward trend. The price remains below 50 and 200 average averages, undergoing short-term adjustments within the trend. We expect that such a short-term adjustment will be ahead of the raw material, with the price rising to the zone at 94.40 - 96.41, where the price last encountered resistance and is 23.6 Fibonacci and 50 periodic averages. As soon as we reach our area, we are able to find a short position with STOP LOSS 98.76.
Fundamental commentary: We expect the sentiment to remain negative for coffee in the long run, with the market continuing to be saturated with surplus production. Production in this case exceeds demand, especially of Arabica variety. We expect a short-term adjustment from some strong demand for raw materials due to seasonal fluctuations. Expectations are that high production in Brazil and Ethiopia will continue in 2020, which will continue to exert pressure on coffee prices.
Alternative: The price breaks and stays above 96.41, creating the conditions for a longer price increase to 101.97 and spoiling the original bearish scenario.
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