Coffee futures have held in a volatile sideways trading range through much of November, appearing somewhat non-directional in the short term while conforming well to the long term chart analysis. Scaling back to the 240-minute time interval, Autochartist has identified a broad Descending Triangle chart pattern.
The recent congestion area near the $2.40 per pound level formed a rounding top at the trend line resistance created by the top of the triangle. The failure of the market to push through this level set up a short entry opportunity, where a stop-loss can be entered above the formation.
Continued selling pressure would send the market towards the projected price support level near $2.22 per pound. If achieved, this would add significant strength to the overall pattern as it continues expanding in both price and time. A breakout below the triangle support would trigger a technical breakout with strongly bearish implications. Conversely, a reversal back above the stop-loss point above $2.40 per pound is likely to generate a buy signal, with Autochartist generating a new upside forecast on confirmation of the breakout.
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