Coffee futures executed a breakout from a broad Rectangle chart pattern identified by Autochartist this week. Follow-through has so far been muted, allowing time to position at the current levels in anticipation of a continuation towards the target.
The pattern scores 8 bars in the Clarity and Initial Trend categories, with an overall Quality ranking of 6 bars. Key Level supports have not yet established but are likely to do so as the top of the rectangle becomes horizontal support. The breakout above $2.42 per pound occurred on a modest momentum reading of 4 bars, emphasized by the short term pullback now underway.
Strength coming into the market at the current price will be required to confirm the breakout. A move higher towards $2.43 per pound or better during Wednesday's session would lend weight to the forecast and could encourage momentum buying. The projected price target generated by Autochartist calls for a minimum swing high near $2.45 per pound, with an upper end as high as $250.60 also possible. This would put the market back on bullish footing and suggest the recent decline to below $2.30 per pound was a temporary retracement in the long term bull market.
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