Kira Brecht
ICE March coffee bulls have pushed the market higher for the second day in a row as coffee shrugs
off its latest minor corrective pullback phase. The near- and intermediate-term bull trends remain
intact on the daily chart.
ICE March coffee recently traded up 265 points at $1.1975 a pound.
The ICE coffee market remains in the midst of a substantial multi-month bull trend pattern, after
major bear market action since the spring of 2011. The longer-term bear trend still remains
dominant, but the bulls have made significant progress since November 2013.
The moving average picture has improved greatly in recent weeks and the ICE March contract is now
trading above its 20-day, 40-day, and 100-day moving averages, which is considered bullish by
trend-following traders.
A clear pattern of higher highs and higher daily lows is seen off the November 2013 low. The most
recent swing low comes in at $1.1315, hit on Jan. 27, and that is important nearby support.
On the upside, the bulls are targeting a retest of the Jan. 7 swing high at $1.2260. Beyond there
lies the all-important 200-day moving average at $1.2384, which will be a significant ceiling. ICE
March coffee has been trading below its 200-day moving average since early 2012.
Daily momentum is pointing higher. The nine-day relative-strength index stood at 63% on Thursday
and is rising. The bulls are in position to test the $1.2260-to-$1.2384 zone near term.
The 200-day moving average may be a tough ceiling to crack, at least on the first attempt. But
the bulls retain control of the near- and medium-term trends and are gearing up for a test of that
zone.
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