Short term
Trade view / 07 July 2016 at 8:38 GMT

Brewing on bullish outlook for coffee

Instrument: COFFEENYSEP16
Price target:
Market price:

Since mid-June, we have had a bullish outlook on the price of coffee, as it has consolidated above the key $139/lb level

One strategy is to work with a short-term balance on top of the core position. This trade view can be seen as such a balance to the core suggestion from June 15, or as a standalone shorter-term trade.

The price of COFFEENYCont (COFFEENYSEP16) has managed to hold above the two key pivots $133/lb and $139/lb, and, as of yesterday, the latter pivot completed a successful back test, a key reversal on the daily chart. Given the current structure, and the failure by bears to hit suspected time alignments for a halt to the advance on June 27, we continue to have a bullish stance on the short- to medium-term timeframes.

What makes the current situation so interesting is that signals are telling us that the next alignment for a larger peak is now on August 20, which opens the door for the possibility of a third-wave breakout taking the price of coffee way higher and as we have seen in the past, it can move quite fast. 

Support for this specific trade view is located at $139/lb and a close below is indicative of a re-test of the $133/lb level. Resistance is located at $151/lb and $156/lb.

Management and risk description

Add cautiously to the core position published on June 15 at market around $143/lb or buy as a stand-alone trade at market around $143/lb for a move higher into $151/lb and $156/lb. The stop is a daily close below $139/lb in either case.

The initial timeframe for the core position was four weeks. If future developments for the price are favourable, that trade view will see an update next week as we might need to extend the timeframe for that trade.

The risk to trading coffee is the volatility and a break and a daily close below $139/lb which would put the immediate bullish prospects into serious question.


Entry: buy at market around $143/lb.

Stop: daily close below $139/lb.

Target: $151/lb and $156/lb.

Time horizon: one week.

COFFEENYCont daily chart
COFFEENYCont daily chart
 Source: Saxo Trader

COFFEENYCont daily development chart
COFFEENYCont daily development chart
 Source: Saxo Trader

— Edited by Martin O'Rourke

Non-independent investment research disclaimer applies. Read more
seas seas
Would you consider an etf at all and if so, which one for leverage?
Johan Berntorp Johan Berntorp
It is important ETFs have liquidity in my opinion, JO:arcx is one I found that could work. Not available for leverage though. I have chosen the cfd though Saxo's platform.
Johan Berntorp Johan Berntorp
Nice pop today, the balance trade is working nicely. One could move stop to $143.
Johan Berntorp Johan Berntorp
First target hit, one can take profits.


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