Coffee, Hope, Probability + Levels for May 7th

Coffee, Hope & Probability….

by John Thorpe, Senior Broker

In lieu of a light Data and fed speaker wee, we have a relatively heavy earnings week but none of the magnificent seven reporting, so here goes with a few words on the Coffee Futures Market.

After the July coffee market rallied to contract highs April 16^th.. @245.50

A target based on price count theory had been met and there was a low probability of the rally extending much higher.

When we got the corrective trade and price action took us down below the 21 day MA at the 220.00 area, , this market , for us, showed the rally was over for the time being.

It certainly looks like the price action wants to get back down into the channel between 198.00 and 175.00 as it was uncomfortable at the higher price levels above 200  , due to the steep sell off from the mid-April highs I would look for a corrective rally before we continue back into the comfort zone.

Seasonality:  Southern Hemisphere coffees have already been harvested; Northern hemisphere coffee beans be ripe for the picking in Early Summer to Mid Fall.

The crop was better than expected in the southern hemisphere and the Northern hemisphere weather is tempering…  unless there becomes a disease scare or a sudden drought the next few months, I would anticipate Coffee Bean prices to moderate further, working lower and testing the bottom of the range.

Above we Referenced “probability

The difference between probability and hope

Is that probability is the state of being probable; likelihood.. While hope is the belief or expectation that something wished for can or will happen.

Probability is usually stated between 0 and 1 , One reflecting the highest probability of an event occurring and zero meaning no chance the event will occur.

We avoid Hope in our trading decisions.

Daily Levels for May 6th, 2024

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* This is not a solicitation of any order to buy or sell, but a current market view provided by Cannon Trading Inc. Any statement of facts here in contained are derived from sources believed to be reliable, but are not guaranteed as to accuracy, nor they purport to be complete. No responsibility is assumed with respect to any such statement or with respect to any expression of opinion herein contained. Readers are urged to exercise their own judgement in trading.