The Coffee is Still Percolating

• Posted by Greg Harmon
• on May 22nd, 2013

Coffee ($JO, $KC_F) is one commodity that really need to wake up. You would think that all of the caffeine would give it a big jolt after a two year downtrend. Traders everywhere are watching for this to turn higher so a confirmed reversal could create a good sized first move. But when will it come. There have been multiple potential reversal signals over the last year, and all have failed. Now there is yet another one building. Could this be the one? Let’s take a look. The daily chart

below shows the most recent part of the trend lower. But over the last 2 months a potential base is forming, with a ascending triangle. The Relative Strength Index (RSI) and Moving Average Convergence Divergence indicator (MACD) continue to create higher highs ans they trend up, but the RSI especially continues to pullback to the base. There is no certainty in a turn around in this view. Moving out to the monthly view shows some promise as well. The RSI is starting to level as it falls towards the technically oversold lone at 30 and the MACD is improving on the histogram. Price is slowing

its descent as well as it passes through the 61.8% Fibonacci level. The Doji candlestick prints are happening on increasing volume. These all point to the potential for a reversal, but they have all been preset for over 1 year as well. There is still no solid evidence that would lead to taking even a speculative long position at this point.

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