Second-Degree Divergences at Proven Buyer Zone - Bulls CoiledCoffee C FuturesICEUS_DLY:KC1!jacesabr_real☕ KC1!: Second-Degree Divergences at Proven Buyer Zone - Bulls Coiled The Market Participant Battle: From points 1 to 3, number 2 buyers definitively pushed above and defeated sellers from number 1, establishing themselves as proven market participants. Now at point 4, price has returned exactly to these proven number 2 buyers who previously won the battle. The volume footprint shows mixed delta with selling pressure present, but price holding at this critical proven support suggests absorption is occurring. The fractal bullish bar combined with second-degree divergences indicates the proven buyers are preparing to defend their territory. Confluences: Confluence 1: VWAP First Standard Deviation Perfect Touch Anchoring VWAP from point 1, price has returned precisely to the first standard deviation, creating a mathematical mean reversion setup. This level also pierces through what was previously resistance, which classical technical analysis suggests should now act as support. The precision of this touch - exactly at the 1st deviation - indicates algorithmic and institutional participants are respecting this level as a key inflection point. Confluence 2: Second-Degree Hidden Bullish Divergences While price is making higher lows, OBV, RSI, MFI, and CDV are all making lower lows - creating hidden bullish divergences. The current bar is a fractal bullish bar, meaning it contains bullish divergences on lower timeframes, making all these divergences "second-degree" - divergences within divergences. This nested structure of hidden buying pressure is extremely rare and powerful, suggesting accumulation beneath the surface despite the negative delta shown in the footprint. Confluence 3: Proven Buyer Zone Retest at Support Point 2 represents buyers who proved their strength by defeating point 1 sellers and pushing price to point 3. This isn't just any support level - it's a battlefield where buyers already won once. The footprint shows negative delta currently, but price holding at this exact proven zone despite selling pressure suggests hidden support. The resistance-turned-support flip adds another layer of technical confluence. Web Research Findings: - Technical Analysis: Coffee futures showing "Strong Buy" signals on daily technical indicators with current volume at 23,297 contracts - Recent News/Earnings: U.S. retail coffee prices jumped 21% year-over-year - largest jump since October 1997 - due to 50% Brazil tariffs - Analyst Sentiment: Citigroup raised 2025 target to $2.80/lb from $2.38, with ING predicting $2.68 full-year average - Data Releases & Economic Calendar: La Niña probability at 71% for October-December could bring excessive dry weather to Brazil hurting 2026/27 crop - Interest Rate Impact: Brazil experiencing worst drought in 70 years reducing yields by 12%, with some farmers losing 90% of harvest Layman's Summary: Coffee is facing a perfect storm of bullish factors. Brazil (supplying 40% of world's coffee) has its worst drought in 70 years, with farmers losing up to 90% of crops. La Niña weather (71% chance) threatens even more drought. Trump's 50% tariff on Brazilian coffee caused the biggest price spike since 1997. The technical setup shows we're at a critical support level where buyers previously won against sellers. While the footprint shows some selling pressure, multiple hidden indicators (divergences within divergences) suggest accumulation is happening beneath the surface. Price holding at this proven support despite negative delta indicates strong underlying demand. Machine Derived Information: - Image 1: 1-hour chart showing points 1-4 with proven buyer zone at point 2 - Significance: Clear retest of proven support - AGREES ✔ - Image 2: Clean chart showing resistance-to-support flip at point 2 level - Significance: Classical polarity principle confirmed - AGREES ✔ - Image 3 (Footprint): Shows negative delta (-124, -290, -372) at current levels - Significance: Selling pressure present but price holding at support - NEUTRAL ⚠️ - Fractal Bar Analysis: Current bar contains lower timeframe divergences - Significance: Multi-timeframe buying pressure building despite surface selling - AGREES ✔ Actionable Machine Summary: The footprint shows selling pressure with negative delta, but crucially, price is holding at the proven buyer zone despite this pressure. The second-degree divergences (fractal bar with divergences inside) combined with the exact VWAP 1st deviation touch suggests this selling may be exhaustion rather than continuation. The divergence between negative delta and price stability at proven support often precedes reversals. Watch for delta to flip positive as confirmation. Conclusion: Trade Prediction: SUCCESS (Conditional) Confidence: High While the footprint shows current selling pressure, the confluence of proven buyer support, VWAP mathematics, and rare second-degree divergences outweighs the negative delta. The fundamental supply crisis from drought and tariffs provides strong tailwind. The key is that price is holding despite selling - suggesting absorption. Risk/reward remains excellent with stops below point 2. Monitor for delta improvement as entry confirmation.