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