Reversal Breakout Opportunity Brewing in Coffee and Crude Oil

Apr 6, 2015: 11:38 AM CST

Are we about to see a “Breakout Reversal” trading opportunity trigger for Coffee and Crude Oil?

Let’s jump into the Daily Charts and find out!  We’ll also highlight targets on a breakout.

We’ll start with Coffee (@KC):

At first glance, you might think Coffee and Crude Oil differ greatly, and you’d be correct.

However, both markets are forming similar price patterns and structures that historically have preceded a larger reversal or at a minimum, a short-term stronger bullish opportunity.

As a disclaimer, there’s no guarantee history will repeat perfectly, but if it does, you can be prepared.

The main idea is that both markets have endured a lengthy and powerful short-term downtrend going into 2015 and both markets are holding (bouncing) support with positive divergences.

Similarly, both markets are showing bullish volume on the recent bounce up off support.

Coffee (@KC) is charted above while Crude Oil (@CL) is charted below:

In terms of level planning, Coffee (@KC) is holding support at the $130 shelf.

Oil holds support at the $44/$45 shelf.

Think of these chart-based levels as hard pivots or “Make or Break” levels.

A downturn here that breaks under these levels would simply continue the prevailing downtrends.

However, both markets held support and have rallied successfully – and strongly – to the underside of their falling 50 day EMAs (blue).

It’s at this point we create potential trading opportunities.

A strong bullish breakout beyond these levels allows for aggressive long/bullish positions.

For Coffee, look to play bullishly above the current $150 level for a target play toward $160 or higher.

For Crude Oil, the key level is the $52.00 per barrel level which could open a bullish pathway toward $55 then $60.

As always, monitor open positions carefully as these would be counter-trend reversal opportunities.

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Check out the details and start planning the trip today to join us in May.

Corey Rosenbloom, CMT
Afraid to Trade.com

Follow Corey on Twitter: http://twitter.com/afraidtotrade

Corey’s book The Complete Trading Course (Wiley Finance) is now available along with the newly released Profiting from the Life Cycle of a Stock Trend presentation (also from Wiley).

3 Comments

3 Responses to “Reversal Breakout Opportunity Brewing in Coffee and Crude Oil”

  1. Quick Color Commodity Charts to Start the Week | Afraid to Trade.com Blog Says:

    […] First, take a look at Monday’s “Quick-Charting Money Flow” Grid as well as yesterday’s detailed post Reversal Trading Opportunity in Coffee and Crude Oil. […]

  2. pramod baviskar Says:

    yes crude oil might resume rally after correction and consolidation

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