close icon

Coffee is not so strong

Coffee has been in a strong uptrend during the last five months, climbing up from 100 to above 217, which was quite impressive. But as traders we must not get emotional and over-optimistic. Instead of buying just because prices are rising, we prefer looking at the charts, in order to see if they will keep going north. Below you will see the 4-hour chart of coffee’s May futures.

coffee 4h

It is visible that coffee has been rising impulsively. According to the Elliott Wave Principle, after every five waves, a correction should follow. So in our case, we should expect a three-wave decline, which could lead prices back to the 160 area or even lower. This statement is further confirmed by the Relative Strength Index indicator, since it shows a typical bearish divergence between waves 3 and 5. Even though we may now have enough evidence not to be bulls on coffee, we might want to get a closer look into the wave structure in the white rectangle. If we can count five waves to the south there, we will gain a little more confidence.

coffee 15m

There it is. Five waves down showing us the direction of the newborn trend and confirming our bearish outlook. Only time will tell, whether we are right or not, but our main  goal in the Markets is to be bullish at bottoms and bearish at tops and that is exactly what the Wave Principle is preparing us for.

Charts by

Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

Ahead of the 14% Crude Oil Dive with Elliott Wave

The crude oil market is capable of going from a state of oversupply to one of not enough supply in relatively short time. OPEC and Russia’s decisions and the fact that in a normal year the world consumes over 100 million barrels of oil daily cause the pendulum to swing from glut to deficit quite…

Read More »

Chevron Stock Doubled in a Year, Can Go Higher Still

A year ago it seemed like all hell was breaking loose on the oil industry. Even oil majors like Chevron couldn’t escape the carnage. First it was the pandemic, which forced governments to close businesses and restrict travel. Then, the Russia-Saudi Arabia oil price war worsened the situation as the two countries failed to negotiate…

Read More »

Crude Oil Reaches Bullish Target Amid New Lockdowns

COVID-19 returned with a new force in Europe after the warm summer months. Countries around the continent have entered new lockdowns in an attempt to curb the virus’ spread. The situation in the U.S. has never been worse with roughly 200 000 cases per day. But unlike during the first wave of measures, crude oil…

Read More »

Crude Oil – The Elliott Wave Reason for the Reversal

At the start of last week crude oil was trading at less than $36 a barrel. It was down from $43.84 in August and from $41.91 on October 20th. Fortunately, Elliott Wave analysis helped us prepare for this selloff in advance. So, when the weekly session began, the price of crude oil was down 14%…

Read More »

Crude Oil Bears Make the Most of Their Time to Shine

After the market broke during the pandemic panic and crude oil prices fell into negative territory, a quick and sharp surge followed. WTI climbed to $43.84 a barrel in late-August. But the crisis was far from over and the Elliott Wave principle helped us correctly predict the bearish reversal that came next. Now, crude oil…

Read More »

Crude Oil Gave Bulls a Clear Warning Before it Dropped

It’s been a bad couple of weeks for crude oil bulls. The price had been steadily climbing for months, up over 300% since late-April. In the last days of August, WTI crude oil reached almost $44 a barrel. By September 8th, however, the price was below $36.50. This 17% drop can be explained with the…

Read More »

Bullish Crude Oil Bet Pays Off Against All Odds

When it comes to the crude oil market, last month was one for the history books. The coronavirus pandemic forced the global economy to grind to a halt. This led to a sharp decline in oil consumption, while production was too slow to adapt. As a result, there was plenty of oil nobody wanted as…

Read More »

More analyses