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Slaying the Many-Headed Monster in Coffee
Can you make sense of these bullish, bearish, bullish, bearish news items regarding Coffee?
One of the biggest flaws of fundamental analysis is its tendency to present a multitude of outside factors for a given market --- All of which have conflicting implications.
I imagine it’s a lot like asking Hydra, the nine-headed serpent in Greek mythology, for driving directions. The main dilemma being: which “head,” or rather, fundamental, do you go on?
Take, for example, the following August 7 news items regarding the Coffee market:
- Bullish: Day 8 of a truck driver’s strike in Columbia, the world’s third largest coffee exporter. “Columbia is probably losing up to 30,000 bags of exports a day because of the strikers.” (DJ Newswire)
- Bearish: Crude Oil has fallen 20% from its July 11 peak. “Evidence of a global economic slowdown prompted investors to dump oil,” which brings down the entire commodity complex. (Reuters)
- Bullish: “In all of Brazil, the world’s largest coffee producer, total crop picked was significantly lower than last year.” (Futuresource.com)
- Bearish: The U.S. dollar soars to a seven-week high against the euro. “A high dollar also added pressure, making dollar-traded commodities like coffee more expensive to investors holding other currencies.” (Reuters)
Well, this may not be a Greek legend, but we definitely have our very own Hercules to slay the many-headed fundamental monster: namely, in the August 7 Daily Futures Junctures, Elliott Wave International’s senior commodity analyst Jeffrey Kennedy presents clear and objective analysis of Coffee’s near term trend changes, reinforced by three original price charts.
Here’s what I can say: Jeffrey has identified a classic “Flat Correction” pattern underway in Coffee’s price action. And, considering how far along in its development the flat is, it shouldn’t be long before a major move takes place.
In Jeffrey’s own words: “Friday and Monday are setting up to be exciting days for coffee.”
Editor’s Note: In EWI's latest Monthly Futures Junctures (online now), Jeffrey dedicates his “Featured Market” segment to the long-term trend changes in store for Coffee. With 4 compelling price charts and 3 pages of in-depth analysis, Jeffrey reveals whether java is set to perk up in the weeks and months ahead.