Technical Special: ICE Coffee Is Stabilizing; Watch Weekly Close

Technical Special: ICE Coffee Is Stabilizing; Watch Weekly Close
Dow Jones    
ICE September coffee futures are higher in late-morning action Thursday. Thisweek has seen coffee bulls charge into the arena and propel the market higher,above the $1.6000 level intra-week. While the longer-term primary bear trendremains dominant and intact, the bulls are in position to etch a bullishreversal formation on the weekly chart. Traders should monitor action atFriday's final bell closely, as the market may be at a critical juncture.   ICE September coffee recently traded up 335 points at $1.5575 a pound.   For months now, coffee prices have been sliding lower. This week, however,saw basing action unfold on the chart. The market hit a low at $1.5010 on June18 and has been edging higher since then. A mid-week pop to $1.6150 on June 20was short-lived, however, as the market closed in the lower third of the dailyrange.   On the weekly chart, the market is currently posting an outside week, whichmeans the high and low exceeded the previous week's range. If the marketsettles higher on the week, that could be a bullish signal.   "There is a little stability in coffee for the moment," said Paul Hare,executive vice president at Linn Group.   "We have a big bear trend that is getting oversold. It found overheadresistance at $1.6000 and that will limit the recovery for coffee," Mr. Hareadded.   "It looks like it is trying to reverse on the weekly charts, but this is ashort-term bounce in an overextended bear market that is getting into long-termweekly support," he said. His overall bias remains bearish. "Most likely, wecould break down further toward $1.4500," Mr. Hare said.   Pointing to the recent sideways action, Mr. Hare explained that "if youcontinue this for a couple of weeks, you might see something that could changethe pattern, but it is nothing significant right now."   Bottom line: Mr. Hare's advice for traders? "I'd still be selling rallies,"he said.