Look directly at the sun… and go blind.
Look directly at the recent news stories relating coffee prices to solar phenomena… and be blinded to the reality of what's actually causing the ups and down in the futures market.
Here's the gist. On April 25, coffee prices opened within a bean's throw of a seven-week high. And, according to the fundamental "experts," one main factor was behind the rise:
Regions on the surface of the sun marked by lower temperatures than its surroundings, producing cool gases of up to 4000-4500 Kelvin that appear as big dark splotches through a telescope.
For those of us WITHOUT a Masters degree in astronomy, one April 25 Futures Source spells it out in laymen's terms:
"An 11-year sunspot cycle bringing cooler temperatures to the Southern Hemisphere" has coffee growers bracing "for cold threats to their May harvests."
Put A and B together you got a boatload of headlines that read: "NYBOT Coffee rises as Brazil winter nears" -- AND -- "Coffee futures rally as traders gear up for Brazil's frost season."
Speaking of blistering gasses, this logic is so much hot air. And, the market itself proved that fact on its own in no time. To wit: The moment the clock struck noon, coffee prices turned down in a sharp selloff to one-week lows.
Those little black marks, however, stayed right where they were.
Suffice to say, those traders using the fundamental forecasts to set up their near-term position on coffee got burnt by the sunspots.
The good news is, in the April 25 Daily Futures Junctures, editor Jeffrey Kennedy presents four eye-popping charts of May coffee futures that truly shine the light on where prices could be in the days and weeks to come.
First, Jeffrey reveals that a fifth wave extension is underway in the market. According to "Elliott guidelines concerning the depth" of this particular pattern, he writes, "the ensuing trend will be sharp and find support at or near the extreme" of a certain wave that came before.
Jeffrey finishes off his cup of coffee analysis by "adding in some parallel lines and throwing in some Fibonacci retracements" to show exactly where "sold structural support is."
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