Coffee Choices: Cafeinated or Decaf?

Coffee, $KC_F, is at an important juncture after finding a bottom at the 1.50 level. The weekly chart below shows a move straight higher after that Tweezers bottom, and a substantially oversold RSI. With the RSI now flirting with the mid line and closing in on a turn to bullish and the MACD rising supporting further price action to the upside, we find price retesting a critical level. It is at the 61.8% Fibonacci retracement level of the long move higher into early 2011. Between this level at 1.88 and the rising 200 week SMA at 1.74 was a critical area on the move lower as it consolidated there for 10 weeks. Now back-testing it from below, presents a trade opportunity either to the downside on a failure or to the upside on a break higher. A Measured Move lower takes it well below a full retracement at 1.13. And a break higher sees 2.11 as the next target. Even if you do not trade Coffee this can be important. Starbucks, $SBUX reports Thursday night. A prolonged rise in Coffee prices will impact their earnigns and other Coffee companies like Caribou, $CBOU, Java Holdings, $JVA and maybe Green Mountain, $GMCR. Think you do not need to care about Coffee prices, think again.

Coffee, $KC_F

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