December Coffee Correcting After Rally

November 7, 2018 9:07AM CST

After such a major rally over the past month, it would appear natural for the market to meet resistance, and ultimately correcting as it should. A large supply still awaits next season and we’ve also seen some weakness in the Brazilian currency, but strength in the equities market may help coffee prices hold support at these levels.

Technically, it appears that December coffee prices may be forming a bullish pennant continuation pattern to the upside. A break at the apex of the pattern (approx. 116 level) may push coffee prices quickly above the 200-day MA, for a run back to the 125 level. This pattern will likely continue to formulate over through the balance of November, with the apex of the pattern plotted to be reached in the beginning of December. Likewise, a break down at the apex could send coffee prices back down to the 110 level in a massive hurry.

Coffee Dec '18 Daily Chart

Coffee Dec '18 Daily Chart

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

The risk of trading futures and options can be substantial. Each investor must consider whether this is a suitable investment. Past performance is not indicative of future results. Trading advice is based on information taken from trades and statistical services and other sources that RJO Futures believes to be reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgement at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades.

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.

Distribution in some jurisdictions may be prohibited or restricted by law. Persons in possession of this communication indirectly should inform themselves about and observe any such prohibition or restrictions. To the extent that you have received this communication indirectly and solicitations are prohibited in your jurisdiction with registration, the market commentary in this communication should not be considered a solicitation.