Coffee futures are on track for a run higher after bouncing from the swing low inside of an Inverse Head & Shoulders chart pattern. This pattern was identified by Autochartist and is shown here on the 240-minute time interval, from its inception on October 27th through Thursday's trading session.
This Inverse Head & Shoulders chart pattern forms the body of a basing pattern which followed the steep market correction from the $3.00 per pound peak all the way level down to the $2.20 level. In the ensuing retracement, the price action formed the slightly descending neck and shoulder lines that define this pattern. Overall Quality ranks this formation at 7 bars, with an Initial Trend reading of a full 10 bars.
The completion of the test of neckline support at $2.20 per pound forms the right-hand shoulder of the pattern. From here, the market is expected to bounce back to resistance at the shoulder line near $2.40 per pound. A breakout above this resistance, or a failed rally with a close below the neckline, would complete the pattern with the initiation of a directional breakout.
For further information on this and other Autochartist products, visit our website at www.autochartist.com