Coffee Analysis November 2015 (D,W)
Created on Sunday, 01 November 2015 08:23
Written by Austin Galt
Coffee looks to be in the early stages of a rally so let’s revise both the daily and weekly charts.
COFFEE DAILY CHART
The two horizontal lines denote previous swing highs which price has recently busted. That means the recent high was a higher high despite not breaking above the obvious and prominent high set in August 2015. This probably deceived many into thinking a lower high was in place and expected price to head to new lows.
I have added Fibonacci retracement levels from the recent move up into higher high. The first correction in a new bull trend often makes a deep retracement and price has done just that by clipping the 88.6% level.
Price subsequently put in a low at $116.30 before rallying and I believe that to be a higher low now in place.
The PSAR indicator shows price just busting the dots on the upside so a bullish bias is back in force.
The Stochastic indicator is bullish while the MACD indicator has just made a bullish crossover.
COFFEE WEEKLY CHART
The PSAR indicator show price coming back down to test the dots on the downside. The support held so the stage is now set for a significant rally higher.
The RSI and MACD indicator both show multiple bullish divergences setting up at the recent price low of $114.55 and a significant rise in price is the expectation going forward from here.
I have added Fibonacci retracement levels of the whole range of this chart. This shows the recent low finding support from the 88.6% level.
We are following a broadening top pattern with points 1 to 5 already in place. It is quite possible that this is the final point 6 low with price now headed to new highs however, as laid out in previous analysis, another scenario is after a significant rally now price then comes back down to new lows and that is the point 6 low. This can be studied in more detail at a later stage. For now, let’s enjoy the expected rally and reassess things as it unfolds.