/KC coffee futures have started to move higher following the recently highlighted divergent low on the 60-minute time frame with the first resistance level/target coming up around 1.0562.
KC 60m Feb 11th
Zooming out to the daily time frame, maybe one more jog down for a 2nd test of this key support zone on /KC, maybe not. Either way, the R/R for a long position in coffee as a potential bottoming play with stops somewhat below the support zone appears compelling.
KC daily Feb 12th
I’d put about a 55% chance that JO may have just put in a bottom as last Wednesday’s low with a 35% chance of one more jog down soon to test the 31ish support level before a new uptrend begins (with the other 10% being that I’m just plain wrong & the current downtrend has plenty more downside to come). Right or wrong, I can say that this appears to be an objective time to start scaling into a long-term swing or trend position with stops set somewhat below the 30 level.
JO daily Feb 12th
One reason that I favor the scenario that coffee will & already has reversed above that very well-defined support level (31ish on JO & 0.9768-0.9916ish on /KC), other than the technical case made in the charts above, is that it is almost too obvious a support level. The market (as well as individual stocks & commodities) usually don’t do “easy”. As such, I suspect coffee has either already bottomed & will rally from here, thereby denying ideal entries to all those waiting to step in at support just a bit lower –or- it will take another leg down, slicing through the lower-end of that support range but just enough to run the stops on the longs that stepped in at support while sucking in some more shorts on the breakdown before reversing to squeeze them out.
Only time will tell where coffee goes from here but I’ve shared some (unadjusted) price targets on the daily charts of both /KC & JO above for those interested & may add JO as an official trade as earlier as today, once the regular session is underway.