Coffee Analysis March 2015 (D)
Created on Sunday, 01 March 2015 00:07
Written by Austin Galt
Let’s quickly update coffee using the daily chart.
COFFEE DAILY CHART
Previous analysis showed the potential for a “three strikes and you’re out” low formation which was accompanied by a triple bullish divergence in the Relative Strength Indicator (RSI). While this set up usually leads to a significant rally, on some occasion it results in the complete opposite – a capitulation move. And that is what has occurred here.
We were onto this capitulation move early after price busted the monthly PSAR support which stood just under US$157. Now it is just a matter of being patient and letting this move down run its course.
The Moving Average Convergence Divergence (MACD) indicator is still trending down bearishly.
While a 5 point broadening top formation is in place, I continue to favour a rarer 7 point broadening top to see in the final high.
I have added Fibonacci retracement levels of the move up from low to point 5 high. It looks as if price has its sights set on the 76.4% level at US$130.38 but considering price is in a capitulation move then it would not surprise to see price push things to the limit and trade a bit lower.
I have added a Fibonacci Fan and I favour the final low finding support at the 88.6% angle which looks set to be just under the 76.4% retracement level around mid March.
Then once the low is confirmed we can investigate further where the point 7 high might be. If the analyst proves correct of course.