September coffee futures (KCU25) present a selling opportunity on more price weakness.
See on the daily bar chart for September coffee futures that prices are trending down and have just hit a seven-month low. See, too, at the bottom of the chart that the moving average convergence divergence (MACD) indicator is in a bearish posture as the red MACD line is below the blue trigger line and both lines are trending down. Bears have the firm near-term technical advantage.
Fundamentally, favorable weather and growing conditions in major coffee regions of the world, especially in Brazil, have made bigger coffee crops likely this year. Increased global production has created a surplus of coffee beans on the market. In turn, producers have been selling more of their existing stocks in expectation of still-lower coffee prices in the coming months.
A move in September coffee futures prices below chart support at 285.00 cents would become a buying opportunity. The downside price objective would be 230.00.0 cents, or below. Technical resistance, for which to place a protective buy stop just above, is located at 315.00 cents.
IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.
Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):
Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.
On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com
