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Coffee Price: Countertrend Rebound Looking Likely


Coffee prices have been on the slide over the years, with Coffee Arabica losing almost 70% since the $3.089 peak almost eight years ago. More recently we have seen a similar ramp-up in selling pressure, with a 25% decline seen since the October peak of $1.2674. However, we are now seeing signs of a potential rebound for coffee prices, with a bullish retracement phase looking likely to come into play.

The weekly chart below highlights the inherent risk of buying against the trend, with prior periods of upside proving unreliable in terms of size. We have seen some examples of rebounds that have spanned a few weeks, while others last up to a year (2016-2017). Looking at this timeframe, we can see the potential role the stochastic oscillator plays, with the rise through the 20 mark often providing us with a buying opportunity. A fall below the 8080 level has also provided us with great selling opportunities, yet for now it is the rally through 20 that matter. In either case there is a strong chance that we are set to enter a more bullish phase for Coffee Arabica.

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