Softs

Holiday Weekend, End of Q1, Cocoa Rally Coming to an End?

Posted 03/28/2018 11:36AM CTPeter Mooses

Some traders have been preparing for cocoa to come off the recent highs by buying puts, others have been riding this wave higher as long as possible. Futures prices will need some more bullish news to stay above 2600 even though the chart is showing us the market is building technical support. The May chart has been able to avoid a drop and hold below 2560 – but levels are overbought. A selloff could be in the works if profit-taking grabs a hold of the market as traders start to position further out strategies.

Fresh global demand news will be needed to keep prices at current levels. Currencies continue to add volatility and short-term demand clues as the pound, euro and dollar activity has backed-up moves in cocoa futures. With the shortened trading week due to the holiday weekend and traders exiting their quarterly positions, expect lighter volume and increased volatility.

Cocoa May ’18 Daily Chart

cocoa_may18_daily_chart

Peter Mooses

Follow Peter on Twitter @PMoosesRJO. Peter's interest in trading began during a college internship with Bunge North America on the floor of the Chicago Board of Trade, where he assisted commodities traders and performed market research and analysis. Upon earning a B.A. in economics from the University of Iowa, Peter served as an analyst, transaction manager and team lead in the Global Trust Divisions for LaSalle Bank and Bank of America, where he managed transaction activity in multi-million dollar client fixed income and asset-backed securities portfolios. After years in the banking industry, it became apparent that Peter's real passion lies in futures trading. He joined RJO Futures because he enjoys the analytical aspects of futures trading and appreciates the economic impact that commodities have across all markets. Peter believes in utilizing market analysis and trends to help clients achieve balance between risk and return, while always keeping their investment objectives top of mind.