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Technicals Dictating Short-Term Price of Cocoa Futures

Posted 05/02/2019 7:37AM CT | Peter Mooses

July cocoa futures’ prices have been unable to hold above 2425. After reaching the high in April on the 11th, the market slowly crept down to the 2250 area. Although we had strong demand news on grinding data and the market had also found support in production levels; profit taking and fund selling pressured the market and ended the month with some volatility. The euro and pound provided support for the longs in the market – that was also not enough to push prices higher. Heat and dry weather from key growing regions is also in the forecast, another signal to stay long the market. With all these signs, a close below the 9-day moving average is a short-term negative indicator. A close above the 200-day moving average is a positive indicator in the long-term though, which is part of the reason we are seeing bigger swings over the last few trading sessions. Technicals have been important for prices. There has been support at 2300, 2315. Resistance is strong at 2360 and 2375. Monitor COT data, demand news and short-term production levels – but in the near trade, longs liquidating, and profit targets being hit has lead the trade.

Cocoa Jul ’19 Daily Chart

Cocoa Jul '19 Daily Chart

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Peter Mooses

Senior Market Strategist
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.
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