Medium term
Trade view / 15 June 2016 at 5:26 GMT

Coffee trend turns bullish following a long decline

Instrument: COFFEENYSEP16
Price target:
Market price:

Coffee (COFFEENYCont) has something quite interesting going on since the low set back in January. It has been moving steadily higher, with higher lows and higher highs. And as we can see, the up-legs are now lasting longer then the pullbacks from a time perspective as well.

This is indicative of a new bullish trend that is also confirmed by the 50 and 200 day moving averages trending higher.

Looking at the time cycles, we have a possible alignment with the move off the 2011 highs and the subsequent low and a bounce into the peak in October 2014, and the down-leg lasting from that peak to the low point that was hit in January this year. It isn't been a perfect alignment, but it is close enough, given the long time frames. From a price perspective the 2011 peak aligns with the low set in January. This is also indicative of a bullish trend.

Looking at the shorter time frames, price is now consolidating the last burst higher off the late May/early June lows into the June 8 peak. So far the price has managed to close above the key Gann level at 133, which is positive. Should we see a close above $139/pound, pivot signals are for higher prices into resistance at $151/lb, $156/lb and $163/lb.

Management and risk description

The developments in the price of coffee are interesting and it appears as though the trend has turned bullish.

The plan is to try to exploit this bullish trend by buying coffee (COFFEENYNYSEP16) upon a close above $139/lb for a move into resistance at $151/lb, $156/lb and $163/lb for the weeks ahead. The stop could initially be placed upon a close below $133/lb.

The main risk to this setup is the volatile nature of Coffee and the risk is therefore a breakout which is quickly reversed in the opposite direction. Such breakout failures are often reversed in fierce manor.

Parameters COFFEENYSEP16

Entry: Close above $139/pound.

Stop: Close below $133/lb.

Target: $151/lb, $156/lb and $163/lb.

Time horizon: One to four weeks.

COFFEENYCont daily chart
COFFEECont daily chart

COFFEENYCont daily development chart
COFFEENYCont daily development  chart
Charts: Saxo Bank. Create your own charts with SaxoTrader; click here to learn more. 

— Edited by Robert Ryan

Non-independent investment research disclaimer applies. Read more
Johan Berntorp Johan Berntorp
Is Coffee finally on the fly?
Johan Berntorp Johan Berntorp
One can transform the stop to a hard stop at this point and until we get more cycles a breach of 134 would set the entire situation at risk so a hard stop at 134 appears appropriate as the widest alternative for a stop. Another option would be to set a stop upon a daily close below 139 since such an event would open up for a test of the 135 level..


The Saxo Bank Group entities each provide execution-only service and access to permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on or as a result of the use of the Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. When trading through your contracting Saxo Bank Group entity will be the counterparty to any trading entered into by you. does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of ourtrading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws. Please read our disclaimers:
- Notification on Non-Independent Invetment Research
- Full disclaimer
- 沪ICP备13028953号-1

Check your inbox for a mail from us to fully activate your profile. No mail? Have us re-send your verification mail