Trail S-T Bull Coffee Risk to $1.4845

September 13, 2016 3:28AM CDT

The market's rebound yesterday and overnight from an area of former resistance around 147.75 leaves yesterday's 148.45 low in its wake as an arguable corrective low within the broader recovery from 17-Aug's 137.85 low detailed in the 240-min chart below.  Per such we are considering this 148.45 low as our new short-term parameter from which the risk of a still-advised bullish policy can be objectively rebased and managed.  A relapse below 148.45 combined with a return to historically bullish sentiment will discuss below would threaten our bullish count introduced in 22-Aug's Technical Blog and expose a larger-degree correction or reversal lower that would no longer warrant a bullish view.

Coffee 240 min

Coffee Daily

If the past three weeks' rally shown in the daily log chart above is the resumption of this YEAR'S major bull shown in the weekly log chart below, we would expect the market to now sustain gains above 148.45.  The market's failure to do so won't necessarily negate the major bull.  But with our RJO Bullish Sentiment Index of the hot Managed Money positions reportable to the CFTC returning to a frothy 82% reading as indicated below, even such a relatively short-term momentum failure cannot be ignored as a developing sign of weakness and vulnerability that threatens the risk/reward merits of maintaining a bullish policy "up here".  In lieu of such sub-148.45 weakness we anticipate a continuation of the past few weeks' uptrend to new highs above 155.70 that would then expose a run on this year's 15-Jul high at 157.65.

In sum, a bullish policy remains advised with weakness below 148.45 sufficient to warrant a move to the sidelines by shorter-term traders with tighter risk profiles and pared bullish exposure by longer-term players.  In lieu of such weakness we anticipate a continuation of the past few weeks' rally to new highs above 155.70.

Coffee Weekly

RJO Futures | 222 South Riverside Plaza, Suite 1200 | Chicago, Illinois 60606 | United States
800.441.1616 | 312.373.5478

This material has been prepared by a sales or trading employee or agent of RJO Futures and is, or is in the nature of, a solicitation. This material is not a research report prepared by RJO Futures Research Department. By accepting this communication, you agree that you are an experienced user of the futures markets, capable of making independent trading decisions, and agree that you are not, and will not, rely solely on this communication in making trading decisions.