Coffee Futures Look Like a Buying Opportunity Here. What to Know.

The daily chart for December coffee futures (KCZ26) shows that recent price action has produced a bullish symmetrical triangle pattern and also a bullish pennant pattern. Prices are trending higher, and the bulls have the near-term technical advantage.

Fundamentally, coffee futures prices are being supported by global supply worries amid adverse growing weather in countries like Brazil and Vietnam. At the same time, geopolitical logistical problems have also raised concerns about supplies reaching Western nations. Global demand for coffee is also on the rise.

A move in December coffee futures above chart resistance at last week’s high of $3.1980 would become a buying opportunity. The upside price objective would be $3.8500 or above. Technical support, for which to place a protective sell stop just below, is located at $2.9325.

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 traders 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%): 

1. 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.