Markets

Autochartist - Daily Commodities Update: Cocoa

Cocoa futures are shoring up a support level that could become a major long term base for the market to form a rallying point on the chart. After many months of lackluster performance, multiple tests of the $2,950 per ton price level appear to be drawing in renewed buying interest. This may prove to be a perceived value area for the market, with this Rectangle chart pattern resulting from balanced trade within the recent range.

Without a major shift in the outlook for cocoa, this Rectangle chart pattern may become a long term trading range, ideal for swing trading between the now well-established support and resistance levels. This pattern provides for a range between $2,950 and $3,400 per ton in the nearby Cocoa futures, which is a sizeable range for short to intermediate term trading.

Traders buying support at this level will be watching for any weakness at the support level, as a breach of $2,950 would negate the Rectangle chart pattern and likely initiate a sell-off to a new, lower range. Barring that event, Cocoa futures are now at the lower end of this formation and if it continues to be perceived as a value area, the likely path would be for a retest of resistance provided by the top of the rectangle.

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.


The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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