Few weeks back I wrote about coffee and it is time to revisit.
Coffee can be a volatile market and like many other trading instruments, can rotate between periods of choppiness, trending and simply volatile two sided action.
Recent action leads me to believe that we may see a test of the 160-165 levels. We had a weather snap to 211 Aug. 1st which failed. We then had another breakout Sept. 2nd which also failed and resulted with lower highs and lower lows.
Looking at the daily chart below I did get a sell signal a few days ago and using Fibonacci extensions along with Eliot Wave theory I see a potential for the 160-165 levels.
If you read some of my posts before you may know that for me, speculation on market direction is just the first stop, the main work is deciding if and how to attack using the market view.
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There are many different ways to trade, depending on one’s experience, risk tolerance, account size and personality. In this case selling vertical call spreads and buying vertical put spreads may be a relatively more conservative strategy than using straight futures BUT I would highly recommend to understand the full risks, time value and other factors before attempting to implement that strategy if at all.
Disclaimer – Trading Futures, Options on Futures, and retail off-exchange foreign currency transactions involves substantial risk of loss and is not suitable for all investors. Past performance is not indicative of future results. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change at any time.
About Ilan Levy-Mayer
Ilan Levy-Mayer has been a commodities broker for over 15 years, and holds an MBA in Finance and Marketing from Hebrew University in Jerusalem. Ilan is currently the Vice President and a Senior Broker at Cannon Trading Company.
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