Cocoa Technical Analysis Summary

 Cocoa Technical Analysis Summary

Cocoa Technical Analysis Summary.

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Sell Stop: Below 2494

Stop Loss: Above 2652

IndicatorSignal
RSINeutral
MACDSell
Donchian ChannelSell
MA(200)Buy
FractalsSell
Parabolic SARSell

Cocoa Chart Analysis

Cocoa Technical Analysis

The technical analysis of the COCOA price chart on daily timeframe shows C-COCOA,Daily has breached below the 200-period moving average MA(200) which is leveling off. We believe the bearish momentum will continue after the price breaches below the lower Donchian boundary at 2494. This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above 2652. After placing the pending order the stop loss is to be moved every day to the next fractal high, following Parabolic indicator signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (2652) without reaching the order (2494) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Fundamental Analysis of Commodities – Cocoa

Global grindings of cocoa have increased in 2021 so far. Will the cocoa price slide reverse?

Cocoa demand and consumption have increased recently as countries recover from the coronavirus pandemic. Thus, data from the German Confectionary Association (BDSI) indicated that cocoa grindings in the country has risen: in Q2 of 2021, the reported grindings were 108,615 tons, which is a 16.35% increase from Q2 of 2020. And in North America, the National Confectioners Association’s reported that cocoa grindings rose 4.3% in Q3 of 2021 compared to Q3 of 2020 and by 3.6% compared to Q3 of 2019. At the same time, in Asia the Cocoa Association of Asia recorded grindings 4.1% higher in Q3 of 2021 compared to Q3 of 2020. Rising global cocoa grindings are bullish for cocoa price, but the current technical setup is bearish for the price. A major downside risk for cocoa price are expectations of higher cocoa supply this year: Ivory Coast, the top global cocoa producer, has been experiencing favorable weather conditions which has increased optimism about the main crop during the October-March season.

By Ara Zohrabian – IFC Markets

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