$KC_F – #Coffee short netting 118%, looking for major reversal

The current short in the coffee futures is gaining about 118% on its initial margin requirement. That’s in six trading days.

Can be done, but it’s going to take some serious trending effort on the part of coffee bears to push this swing down more.

So a reversal to the long side?

Coffee is still in an overall downtrend (see chart below) but if it turns now, it will put in a second higher price low since its bottom in December at 118, which makes it not only a long trade to take, but also gives it a chance to have a major bullish reversal. Looking ahead if it can take out 128 with some conviction, there could be the birth of a new bull market in the commodity.

But all that is just speculating. For now the short is on and the profit on this swing is, once again, just fine…

(click on chart for a larger view)

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