Coffee Traders' Forum - A Discussion about Coffee Futures Trading
Coffee Traders Discussion Forum
It's obvious that shorts aren't even a little bit concerned regarding upside risk at these levels, maybe to their own detriment, but they've been right so more power to them. That said, they are NOT adding which, I guess, is some indication that they may start taking a defensive stance as they get ready to scale out. However, the commercial side is concerning as they are hedging crop at these levels and in force (+7175) . I'd think the physical side is the real price discoverer and if they're happy to sell like this at these levels then it's only a sign that we've reached seemingly good value, which the recent lifeless price action indicates. Barring any weather or crop issues, this could very well be setting up for even more of this painful grinding action that we've been seeing, and by that I mean lower.
If you think back on the price action of this week, we how the pops were so short-lived and met with walls of selling, now we know why. What I thought was defensive fund selling was actually crop hedging. That is surprising and is making me rethink everything. Per Nagual's most recent Pitchfork, I'd say that 11675 area can easily be reached. But if we do get there it won't be quick, and I think the only quick downside action you may see is only weak new long liquidation and, as is my opinion, we need to buy into those vacuums IF they come, as you can bet there will be short covering scales. I expect a day of reckoning is in the cards at some point, but the market is showing no signs of urgency right now. Perhaps we'll see a bit more movement tomorrow being that J options are off the board and the 12000 strike pin attempt is now behind us.
Technically speaking, one can make the argument that and inverted Head & Shoulders pattern is forming on the daily (chart below), but the spinning top action as of late just screams indecision and complacency. But for the very few of us who follow Point and Figure charts, the 10x3 shows us to be in a precarious state, with a 11930 print likely triggering selling. So the argument can be made both ways for now, reflecting yet again the indecision in the market.
On we go...