Coffee has just made a reversal that brings up a long term rally scenario. Whereas I had been tracking further declines, but only to set up a major long term rally phase, there was always an alternate scenario such that the end of the Bear was already in. That alternative scenario now looks increasingly likely such that I cashed all my Shorts and went Long late last week (week just ended).
The bearish move off early July top (1-2 Purple) could be seen as either an A-B-C or a 1-5 but the A-B-C is perhaps a bit more obvious. There is strong PMD at the turn and rally point as 2 (purple)
The rally up to 1 (green) again could be read either way but the bearish move down to 2 (green) is a definite A-B-C in my opinion. Had the subsequent rally been a short lived consolidation type move I would have readily believed that the bearish move would continue but after a short 1-2 (brown) the market rallied hard.
Still if this rally was short lived it might be an A-B-C that set up a strong bearish move but then the next bearish phase shaped up like a Pennant or more likely a small scale 1-2 and then rallied again
Now that price has broken back above 10,000 and made new higher highs I am much more convinced of the long term rally scenario.
Obviously we need to see price break above the 10500 level to be more certain and then a break through the long term channel line (circa 11,000) is the next important move and then ultimately a break above 11,500 seals the deal. As there is a potential for this market to reach $30/lb there is plenty of time and lots of reward on the table. Frankly, given the nature of markets like stock indices, I find this opportunity far more compelling. Where else would you get a 20,000 point opportunity? Maybe if the Dow has a total meltdown... Of if the massive destinations for Gold and Bitcoin come off but that is all uncharted territory. This isn't! Just look at a price chart since the mid 1970s...