May ICE Arabica (KCAK0) Coffee: KCAK0 bounced from strong support at 130 and pulverized the downtrend. The RSI has been rising, and the oscillator Bollinger Band is widening: the picture is strong, and we are looking for the current short-term corrective bounce to continue. Remaining above 134 tomorrow will keep KCAK0 positioned to rise towards 137.50, then 140.40 (50% retracement).
Invalidation: A return below 134 will signal a decline towards 132.40. After that, KCAK0 will be positioned to make yet another attempt to break very strong support at 130.
Note: on a longer-term time frame, the current bounce will remain a correction of the underlying decline as long as KCAK0 remains under 142.90, the 61.8% retracement.
May LIFFE Robusta (LRCK0) Coffee: The RSI configuration at the beginning of the week correctly warned of trouble ahead for the downtrend. Remaining above 1250 tomorrow will keep LRCK0 positioned to rise towards 1300 and 1310. After that, resistance is at 1330.
Note: on a longer-term time frame, the current bounce will remain a correction of the underlying decline as long as LRCK0 remains under 1358, the 61.8% retracement.
Invalidation: a return below 1250 would compromise the corrective bounce, and point instead to a return towards the recent lows.
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