Cup o' coffee anyone?

[dmedin]

Back up we go.

 

[dmedin]

Back up we go -

 

[Mercury]

I think we should see another leg down to complete a decent retrace move before the long term rally resumes, although clearly a premature (vs my projection) break of the recent highs (14225) would reinstate the long term rally.

[Mercury]

I am awaiting short term retrace moves on Gold/Silver maybe copper and Oil.  I see something similar on Coffee right now.  Since I caught the top and turn (on the second opportunity at least) I have been tracking the whole move as a potential 1-2 bearish retrace.  With the turn yesterday at around the Fib 62% and fast drop away I am reasonably confident of marking this up as a wave B completion and into a wave C.  There are several candidates for this to terminate, price action and indicators will be key to spotting the turn but when it does turn the next phase would be a very strong wave 3 rally with many 1,000s of points potential.  For now I am short tactically and happy to wait for a few 1000s points to cash and leverage back into long term Long positions.

With so many markets potentially waking up: commodities, USD, possible stocks (???) it could be a very busy first quarter of 2020...

 

[Mercury]

Potential Coffee breakout of a down sloping channel on the 1H coincident with the Fib 50% and where Wave C = Wave A, a typical EWT relationship.  There is PMD on the 1H and Daily charts and EWT rules for a retrace are met.  Clearly the chance of a further drop is still very much there and we may yet see a small bearish retrace and retest of the breakout zone, if confirmed but this is still a decent shout for a Long IMO.

[Mercury]

That potential 1H chart breakout Long scenario reversed and price is once again testing the Fib 50% on a lower low.  If this support level is broken, and I expect now it will be, then the next 2 levels are:

1. The Fib 62% around the weekly channel breakout zone (11175)
2. The retest if the weekly channel line and wave C = wave AX1.618 (Golden ratios) and circa Fib 76%

Hurry up and wait...

[Mercury]

Possible bullish breakout occurring on Coffee.  By no means confirmed and even if we do get a rally it could still break down for a test of that weekly channel line that was broken to the upside previously.  There is compelling PMD here and price has been stopped by the Fib 62% zone.

 

[dmedin]

Would you buy back in at this point, after coffee has taken a huge dump?

[Mercury]

9 minutes ago, dmedin said:

Would you buy back in at this point, after coffee has taken a huge dump?

No!  I bought the breakout but got stopped out for no loss when it reversed, as I thought it might.  A break lower suggests a retest of the weekly channel line and Fib 76% level around 10500-700 range.  A break back above 11,500 would signal a rally resumption.

 

[dmedin]

That's one h3ll of a reversal.  Clearly, investing in commodities is out of the question too.  Sigh.

[Mercury]

58 minutes ago, dmedin said:

Clearly, investing in commodities is out of the question too.

Not sure I follow you.  4000 points up, 4000 down so far.  Seems like a great swing trade to me...

[dmedin]

14 minutes ago, Mercury said:

Not sure I follow you.  4000 points up, 4000 down so far.  Seems like a great swing trade to me...

For me that's only in hindsight, I would have been long and expecting to buy dips and lost out big time if I was trading it.  I am very jealous of people who can see massive swings up and down coming without needing the benefit of hindsight.

[Mercury]

36 minutes ago, dmedin said:

I am very jealous of people who can see massive swings up and down coming without needing the benefit of hindsight

No need to be, swing trading is a war of attrition a lot of the time, often taking many attempts to catch the move.  It doesn't suit everyone.  Key is to find the strategy that suits your mentality and practice it ruthlessly.  If you prefer trend trading then you need to have patience to wait for the trend to present itself.  Actually it is perfect for people who trade on the side but not that good for those who want to day trade. 

[Bopperz]

Robusta is sitting right at the bottom of a level that has not been broken since Nov'19. Going to watch and see if it breaks or puts in a swift reverse.

 

[Mercury]

14 minutes ago, Bopperz said:

Robusta is sitting right at the bottom of a level that has not been broken since Nov'19. Going to watch and see if it breaks or puts in a swift reverse.

If it is anything like Arabica I'd say breaks lower.  I see new lows into the bottom of the range zone now on Aribica.  Having said that, I do anticipate a relief rally at some point so maybe...  Wont last though.

[Bopperz]

Well it happened, Robusta broke lower. 16:45-16:55 (GMT) price broke 1288 and headed down to 1275. Market closes very soon, I am going to look at shorting the pull backs with a target of 1230.

[Mercury]

Arabica looks like it is due a relief rally.  Might happen of the current short term support area or could drop a little lower before it breaks into a rally.  Longer term I see this market making new lower lows and breaking into my market bottom zone past 8000 (or 80 cents if you prefer) before the big rally I was tracking.  I think that overall the big reflation trade that some market players have been talking about is suspended rather than cancelled and will require that USD bear market to stimulate it.  So for now I see further commodity bearishness but longer term I see a big bull market coming. 

From a technical perspective I see the following:

• The price action since late 2014 appears to be in a descending channel (or triangle) conforming to a classic A-E EWT wave count.  That would place the market in a final wave down that should retest the lower channel line at or lower than 8000.
• The monthly PMD still holds with a lower low; the development of theweekly/daily indicators remain to be seen.
• The current bearish phase may be conforming to a 1-5 motive wave.  This would be confirmed by a relief rally that marks the wave 4, after which a final wave 5 would be indicated.
• The wave 3 may be hard to spot but likely candidates include right now and down to the 9350 support level.  We might even get a short relief rally before another drop that then kicks off the wave 4. 

It is hard to spot the wave 4 turn right now so it might be better to wait for it to happen and then seek to go Short to ride the final wave 5 down.  If wave 4 gets back up to about 11,500 to close the gap then there would be a decent amount of point to get in the final bear phase and trading with the motive trend is safer than counter trend trading.

 

[dmedin]

Would you buy now?

[Mercury]

After a channel breakout Coffee looks to be in retreat.  I think this could be the second leg in an A-B-C relief rally to a wave 4 before another significant leg down.  Risky trade but I went Short above the gap with the hope that that gap would at a minimum be closed, thus allowing me to move stops to BE.  Now holding to see how far it will run.

[Mercury]

Bear move looks set to resume.  I as assuming this to be a wave B (brown) in A-B-C (light blue) form at present with a target of circa 10,200 for the end and turn back into the wave C (brown) to conclude the 3-4 (green) retrace at which point I would expect a resumption of the long term bear market until we get suitable levels and circumstances for that mega bull market, but that could yet be a long way off...

It is of course possible that the rally was all the wave 4 retrace we are going to get so 2 scenarios remain in play.

[Mercury]

Possible turn at wave B on the Fib 62%.  Would need to see a channel breakout to the upside to confirm.  If it does break into a wave C it should run quite fast and then I would be targeting the Fib 38% off the prior rally top for a wav 4 (green) end and turn back bearish.

[Mercury]

The breakout materialised and I managed to get Long.  While price remains below the previous top a reversal into a continuation of a bear move is always possible but the strength of the move and the various indicators suggest this rally has more to go.  In terms of how much more beyond the wave A (brown) top it is essentially impossible to say because there are at least 2 strong scenarios:

1. A relatively short retrace to the Fib 38% area (11,600ish) before a resumption of the bear move
2. A much higher A-B-C (blue) format to at least the Fib 62% and then a large move down to new lows

The reason everything is possible is that the long term charts show that price is in a narrowing channel that may well be tracing a classic A-E pattern.  Within such a pattern the waves can be very hard to call however for now I am seeing scenario 2 as a slight favourite, which could be wishful thinking...  How price action progresses in the approach to the 11,600 resistance area will be important to watch.

[dmedin]

Coffee has wings:

[Bopperz]

Very close to buying some of this today, even though the ATR is out of my budget. I think this might retreat a bit...

[dmedin]

I agree, and the spread (20 points) and margin deposit are outrageous.  IG should at least let us buy coffee options.  They don't seem to give a sh!t about that though.

[Bopperz]

17 hours ago, Bopperz said:

Very close to buying some of this today, even though the ATR is out of my budget. I think this might retreat a bit...

Looks like the price held up till about 4PM before breaking lower. dod down 2.2%.

[dmedin]

@Mercury

Taking a huge dump today, corresponds to your idea of a Wave C.

[Mercury]

On 05/03/2020 at 15:43, dmedin said:

Taking a huge dump today, corresponds to your idea of a Wave C.

It certainly looks like it.  Turned right on the Fib 50% too.  I'd expect a relief rally at some point but when that is over it should be a straight run down to that 80c area.

[dmedin]

Coffee is doing rather well, Isabelle.

[dmedin]

With a wild chart like this, an enormous spread (£20 minimum to open), and a huge margin requirement, I'm surprised anybody trades this ... coffee options sure, spread bets - no fking chance.

With that being said coffee looks like it's going higher right!