TRADES FOR MONDAY, SEPTEMBER 9, 2019
EMOTION is your enemy more than any market will ever be.
COFFEE ARE YOU SERIOUS? The pattern it has developed on it weekly chart defies technical behavior. Normally when a market in a downtrend (such as coffee) makes a new low after a rally it is suggesting another wave down. But just how reliable is this with coffee? Referencing the Dec. contract this is what has been going on since September of last year:
During the week of Sept. 17, 2018 the low was 95.10. It then rallied to 125.50. It then sold off and took out the 95.10 low and went to 94.70- suggesting another wave down technically. But it didn't, it instead rallied to 119.50.
It then sold off again and took out the 94.70 low and went to 93.70 - suggesting another wave down technically. But it didn't, it instead rallied to 119.35.
It then sold off again and took out the 93.70 low to 93.40 - suggesting again another wave down technically. But it hasn't done it. That's where we are with coffee.
When coffee has made these new lows, as in any market, the selloff should have continued but it hasn't. Each time it holds a week or even a few weeks on the weekly and then rallies instead. It has now held that 93.40 low for three weeks.
Granted each rally was less than the previous one after all coffee is in a downtrend but the lack of follow through with new lows turned out to be a near term fake out instead.
So was the latest 93.40 low a fake out too? Well it has been holding that low for three weeks now on the weekly chart.
So far coffee has tried three times (the latest being the third) to produce another wave down and it hasn't pulled it off. Technically this lowers the probability that it will do so.
Part of the reason could be where it is historically - very low numbers.
But maybe coffee is trying to tell us something with these failed new lows that coffee is finally serious about bottoming.