Coffee Futures – Tuesday Technicals

Coffee Market Ready For A Jolt

There a couple of different wave interpretations that can be seen in Coffee futures.  However, they all suggest the next major move is to the upside.  In addition, there is very favorable risk:reward to get long.  One interpretation calls for immediate rally; the other could see one more new low, but then a return to the previous 4th wave extreme (which is significantly higher).  Bottom line, the market is offering a great risk:reward opportunity to extend coverage in the coffee market.

Coffee Futures Technical Analysis

Coffee futures are looking for a jolt to the upside in the near future.

Supporting evidence to get long:

Divergence between price and momentum.  This can also be seen on the weekly chart.

3 different wave counts all call for the next major move is to the upside

What to watch:

The ADX is approaching the “20” level.  When ADX approaches 20 from the underside, it implies the market is “starting to trend”.  This could be the trigger mechanism to go long.  However, given the risk reward and where prices have been the past 5 years (High of 225.50 and Low of 95.25), the current price of 96.85 looks very appealing to the point one should extend coverage and sleep like a baby wherever the price ends up going.