The recent selloff has been a true signal that the strong supply and weak demand fundamentals of coffee continue offer a brittle floor for prices to stand on. December coffee prices are now approaching a sensitive and critical support area of 12715. This is an area that should find solid support, but if violated may result in an aggressive (and possibly massive) selloff back down to the 120 range lows of June. From an intermediate trend perspective, this technical trader believes that those who are interested in catching a large potential move should consider using sell stops to enter the short side below the aforementioned 12715 area. If the dragon is going down in flames, might as well ride it. Don’t just consider futures as your only option, a wise trader will also use options to manage risk and gain exposure.

Dec ’17 Coffee Daily Chart

Dec '17 Coffee Daily Chart

Adam Tuiaana

Adam grew up in Chicago and was always fascinated by the fast-paced action found in the futures market hub there. He began participating in the financial markets by trading stocks in 1997 and began his career as a trading consultant with RJO Futures in March of 2009. At RJO, he specializes in risk management and disciplined trading plans, and is focused on educating clients with one-on-one consulting and training. Adam believes the best approach to trading is to take a measured and objective approach and let the markets guide your decisions.