A possible shortage of certified Coffee stocks, for July delivery, provide the springboard for 1.40o point price surge during the past two session…with over 1000 points of that rally during Friday’s session. This price action provided a great trading opportunity for traders following the Traders Market Views Swing Trading Report. A buy signal was triggered on June 8th with the long entry at 134.25. The subsequent rally stalled at 148.50 after it breached the upper parallel line and tested the down-sloping reaction line target objective. After reaching the reaction line, Coffee stalled and began to pull back into the close of the session, finally closing at 144.95.
At this time I think it is worthtaking a little time to review the price action and market behavior that identified the buy signal as well as the entry price and target objective. Coffee had posted a double bottom between May 20 and May 25 with the price on May 25th closing near the top of the daily range after testing the lower parallel line. From the couble bottom, the market traded higher over the next five days and reached the up-sloping median line resistance where it turned lower, on a projected reversal date. The market then traded lower for the next four days and dropped to the 60% buy window, while at the same time, finding support at the lower parallel line. At this juncture, the cycle was still bullish and the market was trading inside the 60% buy window. After trading inside the buy window and riding the lower parallel line support for two days, Coffee traded out of the window and closed near the top of the daily range on June 9th. This close was significant for a couple of reasons. The market had confirmed a low pivot, after support held inside the 60% buy window. This price action confirmed the lower pivot of a new reaction swing and identified a trigger price at 134.25. The buy signal was triggered the following day. After the signal was triggered, Coffee provided additional confirmation with a moving average “double cross” and a closed above the 20-day EMA.
The Coffee had tipped its hand (if you knew what to look for) and the following day the market began to show signs increased volatility. Friday’s session opened strong but quickly surged over 1,000 points higher, due to concern about certified stocks. This is when the latecomers began to chase the market, while at the same time, the TMV Swing Trader report ws recommending to exit as Coffee reached the up-sloping reaction line target objective!
