- New Science in old markets -

Coffee rallies into a top signal

We wrote about Coffee in the September 4th edition, pointing out that it had made bottom extensions at every time scale and that the long decline in prices was soon to be over. It did go a little lower after that but has since rallied by about 25%. Now it has made a daily-scale top extension, so this part of the up-move is probably at or near an end:

Coffee top ext

We also wrote in that edition that: "Coffee is typical of those agricultural commodities that 'bump along the bottom' in a jagged pattern which has a fairly flat base and peaks of various heights. Prices are at or near that base now."

We still think that, so there may be a chance to scalp a profit on the short side hereabouts as the market will probably dip again as part of that process. We are more inclined to buy any such dip, if and when it happens, so if you try shorting, (with the usual caveats about selling after top extensions - wait to see if some kind of 'churning' happens before a drop) don't try too hard. Take a reasonable profit, as quickly as you can.

All signals courtesy of software supplied by our friends at Parallax Financial Research www.pfr.com