Friday, February 21, 2014

Weekly Coffee Futures Recap for Friday February 21st

It's time to check in with 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

Trend: Higher
Chart structure: Awful

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1 comment:

Ray @ The Crude Oil Trader said...

May coffee closed slightly higher on Friday but remains below the 38% retracement level of the 2011-2013 decline crossing at 17.11as it extends the rally off November's low. The low-range close set the stage for a steady to higher opening on Monday. Stochastics and the RSI are neutral to bullish signaling that sideways to higher prices are possible near term. If May extends the rally off November's low, the 50% retracement level of the 2011-2013 decline crossing at 19.02 is the next downside target. Closes below the 20 day moving average crossing at 13.93 are needed to confirm that a short term top has been posted.