ICE Coffee Poised For Counter-Trend Bounce

DJ Technical:
 ICE Coffee Poised For Counter-Trend Bounce
ICE July coffee futures have poked higher Friday, as the bulls attempt tocarve out a small pattern of higher daily lows. While the dominant and primarylong-term technical trend remains bearish, deeply oversold momentum indicatorssuggest the market is ripe for a counter-trend rally short-term.   ICE July coffee recently traded up 605 points at $1.8520 a pound.   Coffee prices have been spiraling lower for months, recently touching a newsell-off low at $1.7730 on March 22. Since then, the 9-day relative strengthindex (RSI), a widely watched momentum indicator has pushed above the 30 level,traditionally a buy signal on that tool. Also, the coffee market has set aminor "higher low" with the $1.7860 low seen March 29.   Terry Gabriel, technical strategist at Ideaglobal in New York, said "I expecta rally, but will view it as counter-trend."   Gabriel noted that the bear trend had "stabilized" just above major long-termFibonacci retracement support at the $1.7700/1.7300 zone, which represents76.4% and 78.6% of the June 2010-May 2011 bull trend, he said.   "It does look like that support shelf should hold for the time being andgiven how oversold the market got on a daily and weekly basis, coffee couldmount a counter-reaction rally," he added.   On the upside, over the next two to four weeks, Gabriel saw potential forcoffee to rally toward the $2.0000/2.1000 region, the latter level representingthe Feb. 28 daily high.    But, if the bulls were to propel coffee that high near term, "then I wouldexpect the prevailing long-term decline to resume," he said. Bottom line? "Iwould be a seller near $2.0000/2.1000," he concluded.