Interesting pattern forming in Coffee. After a long "Rounded Bottom" a Handle has emerged that looks to be consolidating. Will be interesting to watch in the coming days to see if this pattern can be sustained - macro support from weakening USD and supply side constraints will support continued momentum.
Coffee is bouncing off long term support. The RSI is making higher lows and stochastics are turning up. We could retest the recent lows over the coming months as the right shoulder is established but the picture looks constructive. We are still in stealth mode so but how long is that going to last?
Coffee is the laggard in the soft commodity complex
Since June 2020:
- Bloomberg Agriculture Index +23%
- WT Coffee +6%
This could soon change:
- Head and shoulders bottom in formation
- Divergence on the RSI
- La Nina in 2020-21 could reduce coffee production in Brazil, the world's largest producer
Wait for confirmation of resistance from the upper trend line before the price heads down again.
This is supported by the high RSI level.
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Weekly chart worth noting. Looking for Coffee to melt up through 2018. suspect we saw cycle lows at Dec 2017
Huge bull pennant. Bullish Divergence on RSI and MACD?
DSI of only 20 on 9th Feb 2018
LSE
