December cocoa is attempting to find support. After the market found consolidation last week, it broke lower the past few sessions. Technically, the market broke support and moved to levels last seen in August. At that point on the chart, cocoa saw a decent rally – will the same happen now?
The fundamentals are similar – unknown demand for the rest of the year, will the recent weather affect production levels and will the global economy pressure commodities? Currently, there are a lot of unknowns.
Trader’s need to monitor the Fed tapering and how outside markets react. At the moment, this recent pullback could be a good buying opportunity for bulls looking to gain exposure. A not so far off target of 2600 is realistic in the near-term for December cocoa. Expect volatility as we approach contract expiration.