Brent Harris Elliott Wave
Futures Market Advisory Service

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Coffee (Oct. 10, 2005)

Since the long-range pattern in coffee clearly indicates that the 2001 low (41.50) only marked the completion of an INITIAL, SUPERCYCLE-WAVE-(A), it is highly likely that upon the completion of an intervening, wave-(B) rally, a wave-(C) decline of EQUAL DEGREE will occur. To that end, since it is already theoretically possible to label a terminated, (B)-wave, at the March 2005 peak (137.00), a HIGHLY BEARISH wave-position could be at hand, now. However, because this interpretation would imply that the FINAL, (C)-wave section down will bottom within the next year or so, the overall duration of the post 1997 BEAR would amount to ONLY about 10-years. Note, because the last Bear cycle took 15.33-years to complete, it seems rather improbable that the current Bear will only consume 10-years. Furthermore, given that my long-term analysis strongly indicates that the final, (C)-wave drop will NOT exceed the 85.4%-depreciations from the 1977 and 1997 highs, or 49.30-to-46.45 (47.90 average), the implication is that the overall formation will take the shape of a CONTRACTING FLAT. Under this count, it would be virtually impossible for the (B)-wave to peak as low as the March 2005 top (137.00), as this would translate into an inconceivably short, wave-(C). With that said, I think the best wave-count here is that the drop from the March 2005 peak is a CYCLE-WAVE-B. In which case, once a completed, SINGLE, or DOUBLE-THREE formation can be labeled, the stage should be set for one heck of a buy. If the current decline can bottom at the 56%-retracement/support projection from the 2001 low, and a 38.2%-depreciation from the March top, or 84.60-83.65, then the upside potential will probably BE AT LEAST 60.00-cents per contract ($22,500). Note, assuming wave-C up is at least 61.8%-the length of wave-A, then prices should advance to AT LEAST the 34.55%-38.2%-retracement combination from the 1977 and 1997 highs, or 143.75-147.10. However, if we are truly in a CONTRACTING FLAT formation, I think the more likely scenario is a final rally to the 159.00 level, if not a lot higher.
 

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