Coffee futures perked up in Wednesday's trading session after touching off key support earlier in the week. The long downhill slide in this market has formed a decisive falling wedge chart pattern, identified by Autochartist and shown here on the 240-minute time frame.
Coffee hit a multi-year low price of $1.70 per pound before finding support at the trend line of the falling wedge chart pattern. The subsequent bounce confirmed this support level to be intact, shifting the bias towards a move higher in the near term. Autochartist rates the overall quality of this pattern at 7 bars, and projects a retest of the upper trend line resistance near $1.87 per pound.
A breakout above this level would be a strongly bullish development, generating a buy signal with the expectation of a major upward retracement to recapture some of the losses incurred during the long decline from where the falling wedge began at the $2.20 per pound level.
Should the price fail to carry through to the upside after testing resistance, the price would be expected to move back into the falling wedge and resume its gradual downtrend. For further information on this and other Autochartist products, visit our website at www.autochartist.com