Last Thursday I said that the coffee market had corrected rather dramatically downward. Since then after three days of trading, May is down another 400 points. May closed today at 124.50, down only 45 points for the day with a trading range of 300 points. Technicians call today’s candlestick a spinning top because of the long tails up and down with a very limited change from yesterday.
Two weeks ago the dollar had weakened which may have cause the May contract to go up over 142.50. Now the dollar is strengthening which may be one reason May is showing weakness.
Although May has come down a lot, as long as the dollar continues to strengthen against the Brazilian Real, I think that the market has limited upside movement unless of course the weather forecast for Brazil is for temperatures to be single digit Celsius