Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
Happy Sunday All. As we head into the final month of the year we have our last few COT reports for 2017. This report covers a narrow 4 cent trading range, closing near the high end of the range. The period began with the low , 12635 and climbed in what was yet another First notice day rally. The period saw a continuation of falling OI as well as decline gross longs on the commercial side. Looking at the supplemental report we again see the "NET" position shift back to a very light NET short. Most of the change was a result of commercial longs liquidating. Looking closely, we see this was done in form of futures. With nearly 5k EFP posted, it is possible that this was a contributing factor. Recall , with 11/28 OI report, we saw a 2,242 EFP posting in H8. Nonetheless, we see a phenomenon of diminishing LONGS across all sectors as the market makes any spike higher. This is something that Tango put a spot-light on several weeks ago and we continue to see evidence of this when looking at the COT.
On the non -commercial side, we see the typical short covering by the funds as the market rebounds off any major low. We settled 5 cents off the recent low (12485 on 11/20) to close the period, though the criteria we often use to validate systems reversing would not have been accomplished until the last day of the reporting period. So it seems, there was some other dynamic contributing to the large fund/spec short covering. We see that large and small traders are willing sellers as the market advances, selling out longs accumulated at the market lows. We continue to see this pattern repeat. Large and small traders increase gross longs as the market tests key support in the mid 1.20's and are happy to sell on any advance back to 1.30+. Worth noting, via the supplemental report, the gross short position is about 10% off the record short position from the
November 13 report.
So what's next?? We continued to see the same pattern of system short- covering and long liquidation right into the outside day reversal on Thursday 11/30. Here we made a high of 1.33 and quickly reversed course. We saw big volume on Thursday and continued decrease in OI, but relatively speaking the change in OI on this key reversal was not too large. Hard , IMO , to determine what took place. Keep in mind, it was the last day of the month and this could have contributed. Particularly when the 13280 level was taken out , but the resistance was not. In other words, the resistance remained up to 1.33 in the form of ICEBERG selling. As the market slid back with the absence of any convincing buyer, the reversal began to feed itself.
Friday saw quiet but steady action as the market retraced some of Thursdays loss. As Nagual indicated, the market remains in the consolidation phase and despite a couple of upward attempts to break out, we remain virtually in the same trading range for quite some time. What will be the catalyst to get us out of this trading range??
Wishing all a great and profitable week ahead. Gt.