our trading partner Mike Seery for his take on where coffee ended the week.
Coffee futures in the May contract rallied 3000 points this week closing right near contract highs at 170 a pound all due to the fact of a major drought in central Brazil which is the largest grower of coffee in the world sending prices up about 60% in the year 2014 and I’m still recommending if your long this market to continue to stay long as I think 2.00 is coming relatively soon and could happen on Monday especially if no rain happens over the weekend. Volatility is very high in this market currently so if that scares you look at the July bull call option spreads limiting your risk to what the premium costs allowing you to live through these daily fluctuations as this volatility should continue for months to come.
Coffee futures are trading far above their 20 & 100 day moving average with awful chart structure currently, however if you are long a futures contract I would place my stop below the 10 day low which is around 135 a pound which is quite a distance away, however this stop will be raised on a daily basis and will become relatively tight in the next 5 days. When you trade the commodity markets you want to let your winners run and get out of your losers relatively quickly and this is the perfect example of one market like coffee that can make your entire year
Chart structure: Awful
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