I look at all assets classes and am just here to profit. I don’t care about the “why” to a move in asset prices, I just want to be on the right side.

I’ve had my eye on Cocoa since September of last year when it started tumbling. I was hoping it’s long term uptrend would hold as support (see below). It did not and I did what any rational investor  would do: “Next.” Looking back at the chart today, something caught my eye. Is Cocoa building a huge failed breakdown here?

Here’s what I’m seeing:

Monthly Chart:cc0.png

Weekly Chart:

Daily Chartcc2.png

Cocoa looks potentially good on all time frames to me. We have a bullish momentum divergence in each chart. Price isn’t crashing and making lower lows. If we can get back above the uptrend line, which is now resistance, I think we can see prices back to the down trendline from this previous consolidation pattern (or ~3,325 area) over the mid to long term. Lets wait and see how it continues to play out.

Cocoa may provide sweet returns in 2017 if this follows through.

Have a good weekend.


April 28th, 2017 Update:

My post was early but Cocoa looks even better here if you are bullish and/or like the risk/reward (see below). Will this prove to be a false breakdown below the 2009 and 2011 lows with a nice divergence taking place?


Also in our favor are the commercial hedgers about as long as you can be, adding to their already extremely large positions.

Source: FreeCoTData

Time will tell if this support turns into strong resistance. If so, I will close my position and move on. Lets find out.