Last week March 2014 coffee opened at $106.50, and after a rocket ride up on Tuesday closed the week at $115.25. What gave bulls the shot in the arm to do this? News last week was there could be a near-term squeeze in Robusta supply, which would increase demand for Arabica.
Today we see that concern dropping as Vietnam has once again started selling coffee that they held back while waiting for the price to rise. Keep in mind they are the world’s second largest coffee producer. So with today’s news on Robusta supplies, bulls look to be losing steam. If you did catch some of this ride up, make sure you adjust your stops.
Looking at big money off of the COT reports, we see a slight bear move this past week.
If you need help understanding how to understand how to use the NEW COT report to your benefit get instant access to my new e-book "What Lies Beneath ALL Trends". It is filled with eye opening information.Commercial Net Tracker instructions: This form tracks the Commitment of Traders (COT) data for the commodity futures market. This form "looks" at the most recent five weeks of COT data and provides visual indications of the data. A) If the current value is at a 12-month low, the cell will display a red/burgundy background. B) If the current value is at a 12-month high, the cell will display a green background. C) If the current value went from net negative to net positive, the cell will display a blue background (indicating a bullish condition). D) If the current value is both a 12-month high and also went from a net negative to a net positive, the background will be green. You should view the data with green backgrounds to determine if they also went from net negative to net positive.
Proceed to Page 3 for this week's detailed technicals...
Technicals
On the daily chart below you can see the very strong downtrend (ADX over 60), becoming a weak trend (ADX at 14.74) and climbing now reflecting a strong uptrend. You can clearly see when ADX was below 20 and Stochastics became oversold that a correction was definitely coming. Weak trending markets usually do not remain overbought or oversold for very long. You can see the correction bouncing off of $106.00.
On the weekly chart, strength of the trend looks to be just starting with ADX now at 26.9. Weekly Stochastics are mid-range and rising.
Have a prosperous trading week.
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