Keep A Close Eye On Coffee

Coffee Futures---Coffee futures in the March contract is trading slightly higher for the 3rd consecutive session up 30 points at 123.60 a pound as I'm currently sitting on the sidelines, but I will be recommending a bullish position if prices break the 5 week high of 125.85 while placing the stop loss under the 2 week low standing at 119.10 as the risk would be about $2,600 per contract plus slippage & commission.

Coffee is one of the largest contracts out of the commodity sectors as you are controlling 37,500 pounds as the chart structure at the present time is outstanding even though the risk is relatively high because it is such a large contract so you're going to have to accept that type of risk if your trading coffee.

In my opinion I think the risk/reward would be in your favor as coffee can have huge price swings, however at the present time a large crop coming out of Vietnam and Brazil coupled with large worldwide supplies continue to keep volatility extremely low coupled with depressed prices as I do believe all of the bad fundamental news has already been reflected into the price as we could be involved possibly tomorrow.

Coffee is trading above their 20 day moving average but below their 100 day as the trend is mixed to sideways as the 120 level has held on multiple occasions as I do think we are in a bottoming process as I see the volatility expanding to the upside in the weeks ahead.

TREND: MIXED

CHART STRUCTURE: EXCELLENT

VOLATILITY---LOW

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