Still waiting, beware bulls; risk reward not so greatPro Long (Chart):
- RSI and Stochastik created buy signal
- Orange support line
Pro Long (Physical):
- ICE warehouse stocks new lows
- spreads tightening ever so slightly
Contra (Chart):
- still in middle to upper end of trend channel
- room to go in terms of lower Bollinger band
- long term trend still down
- risk/reward for long position not there
IMHO I start looking into selling put spreads out in August or September. For example the U16 110/100 p spread.
Due to the negative put skew, 1x2s also work great IMHO (selling the one buying the 2s are also an interesting idea).
Kc
Note quite yet, KC longCoffee nearing the orange support line around 122 (2nd month continuation, about 119-120 front month ).
Interesting fact about this correction lower from 134 to 122 is that this is the first time in a couple years that we actually have an up-sloping support line (orange line).
If the orange support holds this could mark a longer term trend reversal.
On the downside further targets remain the lower Bbands as well as the previous lows around 113.
IMHO selling put spreads out in Sep16 might be a good risk reward once we reach the orange line (U16 110/100 p spread). The U provides some decent premium over the other contracts as this is the frost scare month.
KC RSI and Stochastik crossing downShort term targets on the downside:
- 9 day MA around 129
- middle BBand at around 125.50
- Fib retracements
KC coffee Long @ 118.00, target 130; seasonaly August is bullishReaching oversold territory based on RSI, Stoch and running into support on lower BB.
Market overall sideways and lower, BUT seasonally August is a strong month
Buy U15 at 118.00 --> target 130, Stop 112.00
exit at target or before First Notice Day
Arabica Coffee (KC) Breaks Downtrend Since Mid OctoberKC put in its strongest weekly performance in about a month, reinforcing the line in the sand at the 180 horizontal support zone as seen in the attached chart. The 180 level also coincides with the uptrend support line connecting the low earlier in the week with the January 2014 low. Based on the renewed upward momentum these last few days, and the apparent break of the downtrend from mid October, it would appear that the uptrend line break (which appeared last week if you imagine an uptrend support line connecting the same January 2014 low with the July and September 2014 lows) gave a false sell signal alert. The daily Stochastics and RSI are now trending up strongly from oversold levels, while the daily MACD is beginning to positively crossover. Some profittaking can be expected early next week, but the general trend in the next few weeks should be up, with a target next week around 205-206, followed by the next target at the October high.
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KC shortKC broke tested for the fourth time the support at current level and broke, if there's follow through, it's a good short. Historically, July should be the seasonal low. COT report- commercial is not hedging at this point.
