From last month’s commentary ‘…overall, I suggest we may still have some time for sideways moves this coming month but that perhaps this time is coming to an end – the Lower Tine of the 2002 – 2014 Andrews Pitchfork is gradually rising (currently 123.09) and this may trigger with either a bullish tendency or perhaps as might be more likely – the opportunity to test the bearish resolve and try lower still, perhaps to the 38.2% Absolute Fib at 117.03?
Conversely, consecutive closes over the Apr high & 38.2% Fib of the 1997 – 2002 move at 147.10 would push us back into neutral!’. The levels turned out to be right as well as the general direction but there has been some added action so sideways is definitely not a description of this past May. Prices for the first week tried lower but then mid-late week turned higher as we rose to test the 61.8% Fib of the 2002 – 2011 move at 142.73.
Coffee Prices managed to penetrate 142.73 at the opening but then closed lower and we moved down thereafter. Only in this past week have prices ceased to try lower and that is obviously because of the support of the Lower Tine of the Andrews Pitchfork of the big 2001 – 2014 move (currently 124.24). This is significant support and should it be broken with two consecutive closes underneath then there is the key 38.2% Absolute Fib at 117.03 nearby as another support.
Nevertheless, one very important pattern emerged over the past month – on the Weekly Chart two weeks ago we had a big Key Reversal Down! This along with all the MAs pointing down has obliged me to move the bullet point above into full bearish. We have some short term refuge on any recovery to the nearby 50% Fib at 133.71 but the May high at 143.92 is now stronger as resistance because of the addition of the descending Medium MA (currently 144.77).
A respite from the selling pressure ought to show on consecutive closes over the old 147.10 Fib but ‘real’ neutral would only happen on consecutive closes over the 50% Fib at 154.19 though ideally I would appreciate closes over the Long MA (currently 166.40), an unlikely scenario at the moment.
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