4 Reasons Coffee Is Set To Percolate Again
Dragonfly Capital | Apr 01, 2014 12:21AM ET
Many traders and investor know that Coffee (iPath DJ-UBS Coffee Total Return Sub-Index (JO)) went on a monster tear higher from late January through the middle of March. Over that time it rose nearly 20% before pulling back to where it is now, consolidating at about $35. I wonder how many of you realize though that Coffee was off over 60% in the two and a half years prior to that.
This recent ‘massive run up’ has not quite recovered 38% of the fall. Hopefully now you are not so scared about Coffee. Because with the recent cooling off it looks ready to start percolating again.
The weekly chart above shows four reasons to consider getting back in now. First, the chart is building nested Harami, or inside weeks, where the price range is smaller and does not make a new low. This is a signal that reversal may be near. Second, it has also retraced 61.8% of that move higher from January, a key level and a spot where technical traders will look for a reversal. Third, the price has moved back within the Bollinger® bands (blue area) signaling that actual volatility has decreased. Finally, the Relative Strength Index (RSI) has worked off the technically overbought condition.
None of these say that the reversal is imminent but all give a good opportunity to start a trade against a reasonable stop level at the weekly low two weeks ago. Perhaps start with a half position right here.
Disclosure: The information in this blog post represents my own opinions and does not contain a recommendation for any particular security or investment. I or my affiliates may hold positions or other interests in securities mentioned in the Blog, please see my Disclaimer page for my full disclaimer.
Original post
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.