Traders looking to go long in cocoa futures have patiently been waiting for demand to strengthen before they re-enter the market, but it appears that this recent drop in prices may be enough to create demand in cocoa instead. 1890 held as the floor, now cocoa futures have rallied heading into the holiday weekend. With little fundamental change in the news, an expected record high in production from the Ivory Coast could mean this rally will be short-lived. Traders will have to look to the technicals to position themselves in the short-term. Oversold levels have been reached – some think a key reversal was hit and this price point could catapult us back above 2300. Until we know more about what pods are looking like and if production levels are as high as estimated, many traders will take a cautious approach with their entry points or stay sidelined entirely.
May’17 Cocoa Daily Chart
Source: WEB OE