After a complex downside correction , when coffee prices tested their forecasted technical and (why not fundamental) supports around 2.25 (1rst month kcu11) , as expected , coffee prices have shown its strongest possible reaction to the opposite site . The strenght of the upside move from 2.3530 to 2.9085 (kcz11) without any stop to breath , can only be explained by a mix of technical liquidation of short positions with agressive new speculative longs , possibly based on weather bets.
The usual deadline for rains to show up before we say that we are in a drought situation is the end of the first week of october. Untill there if rains show up at any moment , the spring flowering of the coffee trees could be surprisely strong .
CONCLUSION: As usual the mkt has given the fools its hidden surprises!
2.25 and 2.85 still is the "traders" "trading range" of this market!
Technicaly : We may be just forming a misleading bull trap in the form of a bearish head&shoulder , looking at the trend indicators and oscilators on the monthly charts (the only timely bars that we can look in the actual mkt situation ) , the mkt still is in a directional bull trend (ADX) , but to many divergences are showing up and i would prefer to bet on the strenght of the resistances being tested now , and not on the possibility of a new high.
From an Elliott wave perspective , we may just be forming a complex "Double Zig-Zag" correction of the recent bull market.
The KCZ11 August high @ 288.50 is very important to be respected on a closing basis , to allow new mkt highs. So far the first weekly close of KCZ11 in September was not able to sustain this level , closing @ 288.05
Fundamentaly:The weather patterns in general and also in the brazilian coffee regions , have been
so far unfriendly to coffee trees this year . If we dont have a good flowering , wich should occur soon and a very normal pattern of rains starting at the end of this month ; just tighten your seat belts and forget any technical or logical analisys of future coffee prices.
pls read SHOULDER
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