Coffee Elliott Wave analysis

Coffee prices are approaching the highs witnessed in February 2022 as the commodity continues its strong recovery from the lows of October 2023. Since that time, coffee has appreciated by approximately 75%, marking a robust uptrend. However, this surge is now reaching a pivotal juncture where profit-taking and selling pressure could emerge.

Long-Term Chart Analysis

Historically, coffee prices have fluctuated within a broad trading range, with support levels between $40 and $55 and resistance levels between $276 and $337. The current bullish cycle for coffee began in May 2019. The initial phase of this upward move culminated in February 2022, reaching significant highs. This was followed by a corrective second phase, which bottomed out in January 2023. The third and ongoing phase of this bullish cycle started thereafter and is unfolding in what appears to be a corrective pattern within the larger Elliott wave structure.

Daily Chart Analysis

The daily chart reveals that the third phase of this recovery completed its first leg, labeled as wave (W), in April 2023. Subsequently, coffee entered a three-wave corrective structure known as wave (X), which found support at 143.70 in October 2023. The current rally represents wave (Y) of the primary degree wave W (circled). Once this move is complete, a significant pullback in wave X (circled) is anticipated, marking the beginning of the next correction. Given wave (Y) 's proximity to W (circled) completion, it suggests that a major pullback could be imminent.

H4 Chart Analysis

Zooming into the H4 chart, wave (Y) of W (circled) is nearing its end, likely within an ending diagonal pattern, which often signals exhaustion of the trend. This structure is projected to complete slightly above the 250 price level. If the commodity faces resistance around this zone and fails to sustain further rallies above 250, a corrective decline is expected to follow in the coming weeks. Such a move would align with the broader Elliott wave outlook, reinforcing the scenario of a multi-month correction as the market transitions into wave X (circled) of the higher-degree structure.

This analysis highlights the potential for a significant reversal as coffee approaches critical resistance levels, setting the stage for a corrective phase ahead.