Markets

Autochartist - Daily Commodities Update: Cocoa

Cocoa has just registered its first significant long term directional trade signal in a long while, triggering a technical breakout to the downside in Wednesdays' session. Autochartist identified the signal on the 240-minute time interval after the nearby futures dropped below trend line support at $2,140 per ton.

This move lower completed a very long range-bound price action for the market, which has been gradually forming into a Triangle chart pattern measuring 33 4-hour candles in duration. The Triangle scores nicely across the board, with an overall Quality ranking of 8 bars and a 9-bar momentum reading accompanying the current breakout.

The forecast calls for a move down to $2,014 per ton at a minimum, where the market may catch minor support. Additional selling pressure in the face of a weakening commodities complex could send the price to the lower end of the projected range. This could mean a move to $1,846 per ton or lower, exceeding a 100% retracement of the latest rally and encouraging the outlook that a long-term bear market in cocoa may be in the cards for 2012.

A move back above $2,240 per ton would significantly diminish the sell signal, making this a viable location for placing stop-loss or reversal orders.

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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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