Commodities/Forex

Andy Hecht

Top 3 Ranking in Commodities, Metals & FX --SeekingAlpha

Watch Coffee On Friday

A close above the 96.40 cents level on the nearby May ICE coffee futures contract on April 5 would put in a bullish key reversal trading pattern on the weekly chart in the coffee market.

Source: CQG

As the weekly chart shows, May futures traded to a high at 96.95 on April 4 and settled at 95.35 cents per pound. May futures traded to a marginal new low at 91.25 earlier this week which was 0.75 below the September bottom which gave way to a recovery to over the $1.25 per pound level in October. 

With coffee trading to its lowest price since 2005 this week, it is probable that the soft commodity is close to the bottom of its trading range. The 2019 harvest in Brazil is likely to be lower than it was in 2018. Moreover, the potential for a rise in the value of the Brazilian real could ignite a recovery in the price of coffee as the South American nation is the world's leading producer and exporter of Arabica beans. 

Risk-reward favors a long position in the coffee market and a close at 96.45 or higher on Friday could be the start of a recovery in the beaten down commodity. 

Andy Hecht covers Commodities and Forex as one of the original contributing analysts at FATRADER. A former senior trader at one of the world’s leading commodities trading houses, Philipp Brothers (now part of Citigroup), Andy has worked and consulted for banks, hedge funds, and commodities producers and consumers around the world for over 35 years.
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