Coffee price tumbles over 5% as overbought signals spark sharp profit-taking

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Coffee slides 5.39% today on profit-taking

Highlights

KC/USD maintains a strong bullish trend, trading above all major moving averages and key technical supports.
Technical indicators signal extreme overbought conditions and dominant buyer momentum despite recent profit-taking and intraday weakness.
Expected five-day trading range is $296.96–$360.44 with an over 80% probability of a continued upward move unless support at $309.29 fails.

Anton Kharitonov, expert at Traders Union, notes the stark reversal in Coffee prices despite strong technical momentum. He observes that extreme overbought conditions have triggered aggressive profit-taking, overshadowing bullish signals from the MACD and moving averages. The absence of fundamental news on target dates raises concerns about the sustainability of recent gains. Kharitonov emphasizes the risk of a deeper correction if support at $309.29 fails. "Persistent overbought readings without fundamental backing heighten the odds of a sharper pullback," warns Kharitonov.

Viktoras Karapetjanc, expert at Traders Union, remains confident in Coffee’s medium-term bullish structure. He highlights the resilience above all major moving averages and points to robust technical signals that support further growth. While short-term volatility is high, Karapetjanc sees the market offering attractive setups for upside moves. He expects momentum buyers to defend current levels and watch for a break of $350.04. "I believe the bullish framework remains strong, and the market still favors upward continuation," Karapetjanc says.

Momentum signals diverge as price gaps above moving averages

KC/USD trades well above all key moving averages, with current prices above the MA-20 ($282.44), MA-50 ($272.4), and MA-200 ($309.29), signaling strong upward momentum across short-, medium-, and long-term trends. The near-term ceiling stands at $350.04 with support at $309.29, and the Ichimoku Kijun at $299.27 offers a secondary support reference. The long-term trend alignment is bearish. Momentum remains robust as the MACD and ADX both signal "Buy." The RSI registers a high reading of 81.08, with the Stochastic RSI at 100 and the CCI at 222.34, all indicating extreme overbought conditions. BBP at 58.63 confirms aggressive buyer dominance and signals overbought intraday momentum. The Awesome Oscillator is supportive of this bullish tone. Despite a sharp drop of $18.73 (down 5.39%) to $328.7, the pair opened with an upside gap of 0.73% before sliding near the session low. Intraday volatility stands at 6.49%. The day’s performance reflects heavy profit-taking and pressure after the open, with intraday weakness outpacing the otherwise strong momentum signals.

Earlier, analysts noted that coffee’s pullback was introducing renewed volatility within an overall bullish backdrop marked by persistent buying interest. With the latest surge in overbought signals followed by sharp profit-taking, traders should watch for heightened volatility and the potential for abrupt reversals as KC/USD tests the durability of its prevailing upward momentum.

Source of Data: KC Price Analysis by TU

The analysis is based on a proprietary model combining technical, on-chain, and expert data. Not investment advice. See methodology

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