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A Positive Correlation Between Coffee and BRL


July 16 2019

Good morning fellow traders!

As you may already know, Coffee and Brazilian Real (BRL) are in tight correlation which can be clearly seen in the correlation chart below where we see USDBRL in orange turning lower, while Coffee can be putting in a low at the same time. But the most interesting part is the wave structure, so with the help of the Elliott wave model, we can easily put both markets into the one context. We assume that coffee futures will continue to rise while USDBRL will be declining.

Coffee vs USDBRL, Daily

Looking at the Daily Coffee chart, we can clearly see a strong bounce with five waves from the 88.0 region that can be suggesting a bullish reversal after a completed big ending diagonal, and at the same time we can see a nice bearish setup on USDBRL, especially after that five-wave intraday decline. In Elliott Wave theory, after every five waves, a three-wave pullback follows, so be aware of a temporary correction before a bullish continuation on Coffee and bearish trend on USDBRL resumes

However, we do not track these markets often, but we love to look at them if we spot something interesting.

Trade well

Coffee + USDBRL, daily

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