By IFCMarkets
Green coffee reserves decreased in the US
According to the Green Coffee Association, green coffee reserves in the US declined in June by 23.36 thousand bags of 60kg to 6.8 million. Will Robusta prices rise?
According to the Brazilian agency Safras & Mercado, by July 17, 2018, 61% of all types of coffee crops were harvested in Brazil. This is less than the 65% harvest during the same period of the last year and less than the 5-year average (64%). Robusta coffee was harvested in Brazil by 86% versus 93% last year and 96% of the 5-year average for July 17th. Lagging from the schedule can reduce the harvest in case of bad weather. According to the Cecafé (Coffee Exporters Council), coffee exports from Brazil from July 2017 to June 2018 decreased by 8.4% compared to the 2016/17 season.
On the daily timeframe, Robusta: D1 has updated the low since May 2016 and is trying to correct up. A number of technical analysis indicators formed buy signals. The further price increase is possible in case of the deterioration of weather conditions and reduction of the world harvest in the current season.
The bullish momentum may develop in case Robusta exceeds its last fractal high at 1700. This level may serve as an entry point. The initial stop loss may be placed below the last fractal low, the low since May 2016, the Parabolic signal and the lower Bollinger band at 1600. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (1600) without reaching the order (1700), we recommend to close the position: the market sustains internal changes that were not taken into account.
| Position | Buy |
| Buy stop | Above 1700 |
| Stop loss | Below 1600 |
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