Coffee ETN JO Early Signs Of Potential Trend Change

by Olivier on February 13, 2014

The iPath Coffee ETN JO is showing early signs of a potential trend change. As outlined in the chart annotations JO – Coffee ETN is giving us quite a few clues something has indeed changed. To talk about a new bull market in coffee is way too early but a new up-trend might be in the making. Another way to play this theme would be the less liquid ETN CAFE.

  • First series of higher lows
  • Thrusting move breaking above the moving average 200
  • Huge volume accompanying the thrusting move
  • Several gaps during the thrusting move indicating great buying pressure and a sense of urgency
  • The fast moving averages are soon to catch up with price
  • Price is consolidating within a tight chart pattern

Two caveats: 1. This could be no more than a short squeeze with price ultimately resuming the downtrend. Considering the points listed above and the lengthy two and a half year long lasting downtrend I deem this to be very unlikely. 2. A trend change after a downtrend can mean two things: A new sideways trend. A new uptrend.

That being said I put on an initial position. Along the way adding to that position if things go according to plan is the way I am going to play this.

Click on chart to enlarge:

I had learned that an opinion isn’t worth that much. It is more important to listen to the market. I became a reactive trader as opposed to an opinionated trader. – Brian Gelber


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