Trail S-T Bull Coffee Risk to $1.4075

January 11, 2017 2:36AM CST

Yesterday's continued rally leaves Mon's 140.75 low in its wake as the latest smaller-degree corrective low it now needs to sustain gains above to maintain a more immediate bullish count.  Its failure to do so would break the short-term uptrend from 28-Dec's 132.85 low and expose an interim correction within what we'd believe to be a broader base/reversal process.  Per such this 140.75 level is considered our new short-term risk parameter from which advised cautious bullish exposure can be objectively rebased and managed by shorter-term traders with tighter risk profiles.

Coffee 240 min

Coffee Daily

The daily (above) and weekly (below) log scale charts show an absolute textbook example of the elements we always look for in a base/reversal-threat environment:

  • a confirmed bullish divergence in momentum amidst
  • historically bearish sentiment following a
  • complete 5-wave Elliott sequence down from 08-Nov's 179.55 high to 28-Dec's 132.85 low
  • less than a half-cent away from the (132.41) 61.8% retrace of 2016's entire 111.05 - 176.00 rally.

The extent and impulsiveness of the ensuing rally totally confirms and reinforces our bullish count introduced in 04-Jan's Trading Strategies Blog and warns of a larger-degree correction or reversal of Nov-Dec's 179.55 - 132.85 collapse.  The market this morning eclipsed the (149.05) 38.2% retrace of this recent plunge and has further ad possibly accelerated gains ahead as the daily chart above shows NO levels of any technical merit between spot and Nov's 179.55 high.

These issues considered, a bullish policy remains advised with weakness below 140.75 required for short-term traders to step to the sidelines and further weakness below 132.85 for long-term players to do the same.  In lieu of such weakness we anticipate further and possibly accelerated gains straight away.

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.