Trade of the week: short Arabica Coffee
We would like to short Arabica coffee because of triple RSI negative divergences on the daily and weekly charts and it trading close to its February 2022 peak.
A wide stop at 261.00 should give counter-trend traders enough breathing space for the 200.00 downside target to eventually get hit.
(AI Video Summary)
Previous US natural gas trading outcome
In last week's trading session, a successful short position was taken on US natural gas futures at 2.24, leveraging a protective stop loss. Despite initial price increases, the market fell, validating the strategy as prices continued to drop.
This week's trading opportunity
The focus then shifts to Arabica Coffee futures, currently making multi-year highs. Observing negative divergence in the Relative Strength Index (RSI), despite rising prices, signals a potential price reversal.
This week's trade recommendation involves going short on Arabica Coffee futures at around 254.74, with a wide stop loss at 261.00 and a downside target of 200.00, anticipating a significant downward correction based on the analysis of both daily and weekly chart trends.
This information has been prepared by IG, a trading name of IG Markets Ltd and IG Markets South Africa Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Speculate on commodities
Trade commodity futures, as well as 27 commodity markets with no fixed expiries.1
- Wide range of popular and niche metals, energies and softs
- Spreads from 0.3 pts on Spot Gold, 2 pts on Spot Silver and 2.8 pts on Oil
- View continuous charting, backdated for up to five years
1In the case of all DFBs, there is a fixed expiry at some point in the future.
Live prices on most popular markets
- Forex
- Shares
- Indices
Prices above are subject to our website terms and agreements. Prices are indicative only
