Medium term
Trade view / 12 July 2016 at 6:29 GMT

UPDATE: Coffee trend turns bullish

Coffee (COFFEENYSEP16) is moving higher, which is according to plan. However, it has taken more time than anticipated and the timeframe first outlined will not be enough which is why we need to extend this trade for another month.

A third wave breakout could very well be on its way in this commodity and since the third wave is the longest and strongest part of an impulsive move, one would very much like to be a part of it.

The potential for such an outcome is there as long as we can avoid a close below $139/lb, which is why a close below this level will be the stop from now on.

The targets outlined in the original trade view were $151/lb, $156/lb and $163/lb. It could obviously be wise to take profits at any of these targets as it would be a good trade to see those being reached in any case. I would, however, like to highlight that the price of coffee could very well continue much higher. I have outlined one more target, which if we see a strong move higher is doable.

We have also managed to highlight a balance trade building on this analysis, it can be found here but has its own parameters.

Stop: daily close below $139/lb.

Target: $151/lb, $156/lb, $163/lb and $176

Time horizon: another four weeks

COFFEENYcont daily chart:
COFFEENYCont daily chart

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Source: Saxo Bank

— Edited by Michael McKenna

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Non-independent investment research disclaimer applies. Read more
12 July
Daniel Vasconcelos Daniel Vasconcelos
indeed, continuing frosts down here in Brazil are damaging plantations and a crop reduction of 8.4% is now predicted for 2016. This is the biggest yearly decline since 1996.
12 July
Johan Berntorp Johan Berntorp
Wow, interesting! Thanks for the input.
02 August
Johan Berntorp Johan Berntorp
Coffee has managed to reverse at the key $1.39 pivot, now $1.45 is an obstacle. If we can take out the latter an optimistic outlook is still very much the most likely.
04 August
Johan Berntorp Johan Berntorp
We have two important possible alignments for a low here as we closed above $1.39. If this reversal can get traction and manage to get above $1.45 the tape is still bullish but it is a thin line. More downside now would be a bad sign.


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