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Key Technicals Could Reinforce Recent Cocoa Rally

Posted 08/30/2018 7:32AM CTPeter Mooses

After Wednesday’s move higher, 2300 in the December cocoa contract has been surpassed. The next level of resistance, 2355 was also broken. With a close of 2358 Wednesday, this recent reversal could continue. Although the market hit overbought levels, bullish long-term traders think there is enough long-term fundamental concerns in the crop to add to positions. Supply/demand news has been volatile but there is very little chance that production numbers will recoup enough to pressure the market. If transportation blockage starts to affect key growing areas’ ability to move their cocoa, prices may reflect this short-term issue. Weather premium may also be added to the equation this time of season. Look for 2400 to be the next target level. After the COT data is released Friday, we will have a better idea of how traders are positioning themselves heading into September. Demand releases from corporations will also play a factor into cocoa prices as we enter the end of Q3.

Cocoa Dec ’18 Daily

Web OE Dec '18 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.