Even after a terrific rally in the past seven months, coffee looks poised to push higher.

We turned bullish on coffee back in March, when it traded for just $1.27 per pound. Back then, the chart had just broken out to the upside and coffee looked ready to take off.

[ad#Google Adsense 336×280-IA]We remained bullish on the commodity in July.

Coffee had rallied 10% in a little more than three months.

It had achieved our first price target of $1.48 per pound.

That would have normally been a place for traders to book profits.

But the chart still looked bullish. So we argued the trade still had more upside ahead.

And today, even with coffee trading another 10% higher than it was at that time, more upside remains ahead…

Let’s start with an updated chart of the price of coffee…

Coffee closed Tuesday at $1.64 per pound. That’s almost 30% higher than where it was back in March. It has clearly broken above our first price target… and now looks poised to run toward the next resistance level at about $1.80.

Take a look at the moving average convergence divergence (MACD) momentum indicator at the bottom of the chart. The MACD indicator helps us evaluate the strength of a trend… and the likelihood of a trend continuing.

Notice how the MACD indicator has continued to rally along with the price of coffee. As coffee has rallied, the momentum behind the move has grown stronger. This is a sign of a strong uptrend – one that should continue higher in the weeks ahead.

As a trader, I’m normally quick to take profits – especially on commodity trades that make big moves. But this chart of coffee still looks bullish to me. So I’m willing to stick with the trade a while longer.

However, traders should keep a close eye on the MACD indicator as coffee approaches the $1.80 price target. If the indicator starts to decline – thereby creating negative divergence –that will be an early warning sign of the end of the rally.

For now, though, coffee still looks bullish.

Best regards and good trading,

Jeff Clark

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Source: Growth Stock Wire