Hi Traders! Coffee forecast update and follow up is here. On June 17th I shared this Technical Analysis – Coffee Forecast post in my blog. In this post, let’s do a recap of this setup and see how it has developed now. If you would like to learn more about the way we trade and the technical analysis we use then check out the Traders Academy Club. Spoiler alert – free memberships are available!
Now let’s summarize the idea first:
- 1 Coffee D1(Daily) Chart Analysis – Strong Support Zone, Psychological Level, Stochastic Oscillator
- 2 Coffee H4(4 Hours) Chart Analysis – Very Strong Support Zone, Bullish Divergence, Downtrend Line
- 3 Coffee H4(4 Hours) Chart Current Scenario
- 4 Coffee H1(1 Hour) Chart Current Scenario
- 5 Trading Tips
Coffee D1(Daily) Chart Analysis – Strong Support Zone, Psychological Level, Stochastic Oscillator
On the daily chart, the price which is moving lower has currently reached a support zone. In addition to this, the 90 psychological area coincides with this support zone which makes this area a strong support zone for us. Also, we have a potential bullish divergence that is forming at the moment based on the histogram and moving averages of the MACD indicator. While looking at the Stochastic Oscillator we could see that the price has reached its extreme which we may consider as evidence of bullish pressure. We may now move down to lower timeframes and see if we can find evidences supporting this bullish view.
Coffee H4(4 Hours) Chart Analysis – Very Strong Support Zone, Bullish Divergence, Downtrend Line
On the H4 chart while measuring the two waves we have using the fibonacci expansion tool we could see that the 161.8% fibonacci expansion level of the first wave at 92.19 and the 100% fibonacci expansion level of the second wave at 95.01 coincides exactly with the daily support zone. Which makes this area a very strong support zone for us. In addition to this, we have a bullish divergence that has formed between the first low that has formed on 29th May 2020 and the second low that has formed on 15th June 2020 based on the MACD indicator and RSI indicator which we may consider as evidence of bullish pressure. We also have a good downtrend line that has formed and the price is respecting it so far. If we get a valid breakout above this downtrend line, it would validate the bullish view, we may then expect further continuation higher.
Coffee H4(4 Hours) Chart Current Scenario
Based on this analysis I mentioned that until the strong support zone holds my view remains bullish here and break above the downtrend line would validate this bullish view. The price is moving perfectly as I expected, the price respected the strong support zone and then it moved higher and broke above the downtrend line thus validating this bullish view.
Coffee H1(1 Hour) Chart Current Scenario
While looking at the H1 chart we could see that the H4 downtrend line breakout happened in the form of a bullish trend pattern which we may consider as evidence of bullish pressure. Generally, after a bullish trend pattern we may expect correction and then further continuation higher. Currently, it looks like the correction is happening, once the correction completes itself we may then expect further continuation higher.
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