TECHNICALS-NY coffee may test support at $3.2130 in Q4

SINGAPORE, Oct 17 (Reuters) - New York coffee KCc2 may test support at $3.2130 per lb in the fourth quarter, a break below which could open the way toward $2.5415 to $2.8775 range.

A long-term correction from $4.2995 looks incomplete. It may have adopted a flat pattern, which consists of three waves that are roughly equal in length.

The strong surge from the July low of $2.7710 could have been driven by the second wave, the wave B, which has completed, as suggested by the big black candle forming in the week of Sept. 15.

The current wave C is expected to travel toward $2.8775. This bearish outlook will be revised if the chart undergoes two major formation.

One is a stabilization of the market around $3.2130, which will be considered the first sign of an inverted head-and-shoulders developing from the April low of $3.2390.

This is a very bullish pattern, which increases the possibility of the uptrend from $1.4550 to extend far above $4.2995. But it will not be confirmed until the market climbs above $4.2995.

The other is a break above $3.8840. Such a break will not only lead to a gain to $4.2995 but also indicate an extension of the uptrend from $1.4550.

On the daily chart, a retracement analysis on the uptrend from $1.9215 reveals a series of levels that have been governing the price fluctuation.

The 14.6% level of $3.9525 serves as a pivotal point in evaluating whether an inverted head-and-shoulders would become valid. A break below $3.3910 would eliminate the possibility.

Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.

No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses.