🔍 Setup
Price is approaching a well‐defined supply/resistance zone (red area on chart). Historically this zone has acted as overhead resistance.
Below, there is a green demand/support zone which should act as target support area.
My target on the short is around 7.8% downside from entry, with stop loss placed just above the resistance zone / recent swing high to limit risk.
📊 Fundamental & Sentiment Background (COT & Others)
According to the latest COT report (as of 9 Sep 2025), commercial hedgers are significantly net short in Coffee C.
tradingster.com
However, speculators / non-commercials are heavily net long. This suggests that bullish momentum is still in force.
tradingster.com
Open interest is rising, showing participation in current levels. This makes the risk of a breakout (to the upside) real, if bulls hold control.
⚠️ Risks to this trade
Momentum from speculators could drive price through resistance, triggering stop losses and a strong short squeeze.
Any unexpected fundamental shock (weather, export disruption, currency devaluation, etc.) could reduce supply or boost demand, pushing prices higher.
If volume doesn’t drop on advance into resistance, the upward move may be stronger than anticipated.
✅ Conditions / Trigger For Entry
I will consider entering the short position once:
Price touches or re-tests the red supply zone.
There's a clear rejection (candlestick reversal pattern + bearish confirmation).
Momentum or RSI / MACD divergence is visible.
Speculator net longs show signs of plateauing or declining in the COT (next report).
🎯 Targets & Risk/Reward
Entry: around current price near supply, or after confirmed rejection.
Stop Loss: just above resistance / recent high.
Target: green demand/support zone (approx. 7-8% downside).
Risk-Reward Estimate: aiming for at least 1.5-2x potential reward vs. risk, ideally better.
🧐 My Edge vs What Could Go Wrong
My trading strategy gives me an average short profit of 7.8%, so this is in line with my risk appetite. The probability for a profitable trade for a short position is 75%. However, on average I will lose 12% on a losing short trade.
But I’m aware shorting commodities is riskier when there's strong bullish positioning (as is the case with speculators now).
I will monitor upcoming COT reports and fundamentals closely — if speculators increase longs again, I might bail earlier or tighten stops.
Conclusion: The COT data does not overwhelmingly confirm a short at this moment. It offers partial support via hedger short positions, but speculator long bias remains strong. If price shows a credible technical rejection in the supply zone and sentiment shows cracks, I believe this short has good risk/reward.
Price is approaching a well‐defined supply/resistance zone (red area on chart). Historically this zone has acted as overhead resistance.
Below, there is a green demand/support zone which should act as target support area.
My target on the short is around 7.8% downside from entry, with stop loss placed just above the resistance zone / recent swing high to limit risk.
📊 Fundamental & Sentiment Background (COT & Others)
According to the latest COT report (as of 9 Sep 2025), commercial hedgers are significantly net short in Coffee C.
tradingster.com
However, speculators / non-commercials are heavily net long. This suggests that bullish momentum is still in force.
tradingster.com
Open interest is rising, showing participation in current levels. This makes the risk of a breakout (to the upside) real, if bulls hold control.
⚠️ Risks to this trade
Momentum from speculators could drive price through resistance, triggering stop losses and a strong short squeeze.
Any unexpected fundamental shock (weather, export disruption, currency devaluation, etc.) could reduce supply or boost demand, pushing prices higher.
If volume doesn’t drop on advance into resistance, the upward move may be stronger than anticipated.
✅ Conditions / Trigger For Entry
I will consider entering the short position once:
Price touches or re-tests the red supply zone.
There's a clear rejection (candlestick reversal pattern + bearish confirmation).
Momentum or RSI / MACD divergence is visible.
Speculator net longs show signs of plateauing or declining in the COT (next report).
🎯 Targets & Risk/Reward
Entry: around current price near supply, or after confirmed rejection.
Stop Loss: just above resistance / recent high.
Target: green demand/support zone (approx. 7-8% downside).
Risk-Reward Estimate: aiming for at least 1.5-2x potential reward vs. risk, ideally better.
🧐 My Edge vs What Could Go Wrong
My trading strategy gives me an average short profit of 7.8%, so this is in line with my risk appetite. The probability for a profitable trade for a short position is 75%. However, on average I will lose 12% on a losing short trade.
But I’m aware shorting commodities is riskier when there's strong bullish positioning (as is the case with speculators now).
I will monitor upcoming COT reports and fundamentals closely — if speculators increase longs again, I might bail earlier or tighten stops.
Conclusion: The COT data does not overwhelmingly confirm a short at this moment. It offers partial support via hedger short positions, but speculator long bias remains strong. If price shows a credible technical rejection in the supply zone and sentiment shows cracks, I believe this short has good risk/reward.
Trade closed: target reached
Profit target 1 reached. We have have closed trade and will look for reentry.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.
Disclaimer
The information and publications are not meant to be, and do not constitute, financial, investment, trading, or other types of advice or recommendations supplied or endorsed by TradingView. Read more in the Terms of Use.