Chocolate's Exchange Rate

September 22, 2017 8:57AM CDT

The cocoa market is looking to finish the week in the positive. However, as we finish up another week of trading, I find the most pressing question to be, how long do I have to wait in order for the market to make a move? I would argue that in the next couple of weeks currency is going to be pivotal in how we analyze and trade the cocoa markets. The cocoa market currencies like the British pound, the Euro, and the US dollar are all important to how we weigh the value of the commodity. Cocoa is priced in Sterling out of West Africa, and when we get a great deal of volatility in any of the three currencies, it is likely that we will also see the cocoa futures effected. Therefore, with news out this week that US interest rates did not move, perhaps cocoa will find support on the idea that both the Euro and British pound should hold their recent gains. Technical levels on cocoa are currently supported around 1995 and resistance is at 2066-2077. We need to push past this level in order to help get us to 2100 and beyond. I know many patient cocoa traders will finally feel a great weight off of their shoulders once we start trading and closing above 2100 in the December contract.

 

Dec '17 Cocoa Daily Chart

Dec '17 Cocoa Daily Chart

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