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Wake Up and Smell Coffee... Prices Nearing a Critical Juncture
EWI's Commodity Specialty Service spies a major near-term developement in coffee
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By Nico Isaac
Wed, 31 Aug 2011 15:15:00 ET |
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Right now, the mainstream reports on coffee prices are cloudier than a cup of coffee mixed with curdled creamer.
One recent news article sees no end in sight to soaring prices and writes: "Got 10 Bucks For A Cup of Joe? Speculators Bid Up Coffee Prices." (Miami Herald)
While another source suggests the opposite scenario is at hand; i.e. a bearish one. It reads: "Coffee may fall on concern high prices will dent demand as large crops are expected in Central America and Vietnam." (Bloomberg)
It could take a while for the "fundamental" experts to sort their coffee outlooks out. In the meantime, EWI's Commodities Specialty Service editor Peter DeSario sees a very clear near-term Elliott wave picture developing in the market as we speak. This afternoon (of August 31), I spoke directly with Peter regarding this very break.
Nico Isaac: Which market is providing the most favorable opportunity right now?
Peter DeSario: December coffee prices appear to be making a very important move.
Nico Isaac: What pieces of evidence are you seeing that bolster your analysis: Namely, are there any compelling Elliott wave patterns underway or nearing termination?
Peter DeSario: There appears to be a very clear expanded flat second wave to follow the initial five-wave decline into the June low, as illustrated in my Commodities Specialty Service intraday chart of coffee below:
By the way, for newbies to Elliott analysis, a "flat" is a catch-all name for any A-B-C correction that subdivides 3-3-5. In a regular flat, wave B terminates about the level of the beginning of wave A. The "expanded" variety contains a price extreme beyond that of the preceding impulse wave.
Nico Isaac: I've heard you say before that the Elliott Wave Principle allows you to calculate not only the direction of the trend, but also when it may end -- and also, most importantly, whether your interpretation of the trend is wrong. That being the case, what must prices do to indicate that your analysis of coffee is wrong and it's time to reevaluate the Elliott wave picture?
Peter DeSario: As long as one very specific price area is not exceeded, my primary outlook will be expected.