Coffee Update September 2015 (D)
Created on Monday, 14 September 2015 11:27
Written by Austin Galt
Previous analysis produced a couple of days ago outlined it was now or never for price to stage a rally if new yearly lows weren’t to be seen. Well, today witnessed a James Bond style never say never again move with price putting on a dashing display by surging over 2.5% higher.
Previous analysis of the longer term charts outlined that while price is in a potential zone to turn back up there is still no sign of a turn. There is no change to that according to those weekly and monthly charts. The daily chart is a different story. Let’s take a look.
COFFEE DAILY CHART
We can see the big bullish candle exploded out of the blocks today. Obviously this is just one candle and will need upside follow through but big things start from small things.
This move higher has already broken the first key resistance stemming from the PSAR indicator. The dots from this indicator are now underneath price and breaking that support now would look bearish and probably mean price is headed to new yearly lows.
The Bollinger Bands show price is back to the middle band. Price heading back to the lower band now would look bearish.
The RSI has set up a triple bullish divergence at this low. Now, while this usually leads to a significant rise in price, on occasions it precedes a capitulation move down. The potential for the downtrend to gain momentum was outlined in previous analysis so one has to be alert for this scenario and price breaking to new lows now would likely see this occur.
The MACD has just made a bullish crossover.
It is still early days and price has yet to trade above a previous swing high. That level stands at $126.85 and is denoted by the horizontal line. Price trading above there will likely confirm the expected big rally is now underway.
So, price appears to have rallied at the last moment and we now have some clear battle lines. I now favour the original ABC corrective scenario playing out with this the beginning of the big C wave. However, price cracking below last week’s low of $116 will likely mean the 5 point broadening low is playing out.