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The Coffee Is Still Percolating

ByDragonfly Capital
AuthorGregory W. Harmon
Published 05/22/2013, 08:55 AM
Updated 05/14/2017, 06:45 AM
BIG
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Coffee (JO, KC_F) is one commodity that really needs a wake up call. You would think that all that caffeine would give it a big jolt after a two year downtrend. Traders everywhere are watching it to turn higher, so a confirmed reversal could create a good sized first move. There have been multiple potential reversal signals over the last year, and all have failed. Now there is yet another one building. Could this be the one? Let’s take a look. The daily chart below shows the most recent part of the trend lower.
coffee-daily
But over the last 2 months a potential base is forming, with an ascending triangle. The Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator (MACD) continue to create higher highs ans they trend up, but the RSI especially continues to pullback to the base. There is no certainty in a turn around in this view. Moving out to the monthly view shows some promise as well. The RSI is starting to level as it falls towards the technically oversold zone at 30, and the MACD is improving on the histogram.
coffee-weekly
Price is slowing its descent as well as it passes through the 61.8% Fibonacci level. The Doji candlestick prints are happening on increasing volume. These all point to the potential for a reversal, but they have all been preset for over 1 year as well. There is still no solid evidence that would lead to taking even a speculative long position at this point.

The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.

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