• 518 days Will The ECB Continue To Hike Rates?
  • 519 days Forbes: Aramco Remains Largest Company In The Middle East
  • 520 days Caltech Scientists Succesfully Beam Back Solar Power From Space
  • 920 days Could Crypto Overtake Traditional Investment?
  • 925 days Americans Still Quitting Jobs At Record Pace
  • 927 days FinTech Startups Tapping VC Money for ‘Immigrant Banking’
  • 930 days Is The Dollar Too Strong?
  • 930 days Big Tech Disappoints Investors on Earnings Calls
  • 931 days Fear And Celebration On Twitter as Musk Takes The Reins
  • 933 days China Is Quietly Trying To Distance Itself From Russia
  • 933 days Tech and Internet Giants’ Earnings In Focus After Netflix’s Stinker
  • 937 days Crypto Investors Won Big In 2021
  • 937 days The ‘Metaverse’ Economy Could be Worth $13 Trillion By 2030
  • 938 days Food Prices Are Skyrocketing As Putin’s War Persists
  • 940 days Pentagon Resignations Illustrate Our ‘Commercial’ Defense Dilemma
  • 941 days US Banks Shrug off Nearly $15 Billion In Russian Write-Offs
  • 944 days Cannabis Stocks in Holding Pattern Despite Positive Momentum
  • 945 days Is Musk A Bastion Of Free Speech Or Will His Absolutist Stance Backfire?
  • 945 days Two ETFs That Could Hedge Against Extreme Market Volatility
  • 947 days Are NFTs About To Take Over Gaming?
  1. Home
  2. Markets
  3. Other

Coffee Brewing Something Big

The coffee price has held up at a critical juncture and is now set to explode higher. Let's take a look at the charts.


Coffee Daily Chart

Coffee Daily Chart

We can see price looks to have made a "three strikes and you're out" low formation consisting of three consecutive lower lows.

This third low was also accompanied by triple bullish divergences in the Relative Strength Indicator (RSI) and Moving Average Convergence Divergence (MACD) indicator. Nice. This generally leads to a significant rise in price and I expect no less here.

The Parabolic Stop and Reverse (PSAR) indicator shows price has just busted the dots on the upside so a bullish bias is now in force.


Coffee Monthly Chart

Coffee Monthly Chart

The major support I have been looking at stems from the PSAR indicator which pertains to the dots on the chart. Monthly PSAR support stands at US$156.89 for the month of February and the recent low at US$158.40 came in above. Nice.

It looks like an ABC corrective pattern is playing out with the recent low the end of wave B.

As for predicting where the wave C high may be I have added Fibonacci retracement levels of the move down from 2011 high to 2013 low. The two scenarios I fancy are price putting in a top just above the 61.8% level at US$229.46 or at the 76.4% level at US$259.82. I favour the latter.

The wave A high shows a bearish divergence with the April 2014 high and I'd really like to see a triple bearish divergence set up on the wave C high. Let's see.

Let's finish it off with the weekly chart which shows a very bearish pattern in the making.


Coffee Weekly Chart

Coffee Weekly Chart

Firstly, the RSI looks to have turned back up with bullish divergences in place while the MACD indicator looks to be threatening a bullish crossover. So, higher prices seem likely according to these lower indicators.

Finally, a very bearish 7 point broadening top looks to be in play denoted by the numbers 1 to 7. This pattern is much rarer than its 5 point cousin and even more bearish.

So, coffee drinkers look like they will be forking out a bit more over the coming months.

 

Back to homepage

Leave a comment

Leave a comment