Coffee Futures Technical Analysis

This post is a follow up from our November 26th post, Coffee Prices Will Give Many a Jolt in 2020.

Since the large rally in Q4 of 2019, Coffee has had a vicious retracement providing a nice opportunity to extend coverage for 2020.  Based on our 2020 targets and where the market makes a new low, the risk-reward is very favorable for getting long; risking $1 to make $3.84.

March Coffee Futures Daily Chart

Daily Coffee Futures Chart

  • As vicious as the decline has been, it has remained within parallel lines, indicating it is just a correction of the larger, overall uptrend.
  • RSI is near the bull market support of 40 and holding so far. This can be used as a barometer to see if the current decline is a correction or a new downtrend.
  • Prices near a Fibonacci cluster that provides the market a high probability area to reverse.
  • Use the blue, corrective channel as a guide in determining whether we are in a correction that should be aggressively bought or we are starting a new downtrend.
Daily Coffee Futures Chart

Hourly Coffee Futures Chart

  • Divergence on the hourly chart may signal a direction change soon.

15 Minute Coffee Futures Chart and expected movement in the immediate

  • The breakdown of subwaves on 15 minute chart.