As of Thursday, cocoa futures were down for the fourth straight session. After the trade above 2600, traders took profit, causing some of this sell-off. As longs liquidated this week, traders are deciding whether to take the sideline before Brexit talks or reestablish positions. The markets should see volatility overnight. Demand has been growing stronger in cocoa. The technicals continue to give cocoa futures’ prices support as numbers have stayed above key moving averages. All this could change with the news coming overseas Thursday night. The euro and pound will be greatly affected by the coming news, which will carry over to cocoa.
To add to the current uncertainty in the markets, President Trump tweeted Thursday implying a trade deal was near, causing equities to rally. This would affect the Asian markets and the demand in cocoa from this part of the world. This “unknown” will have traders guessing which side of the market to take.
Conservative traders may look at buying options based on the direction they think the market will take. Others will take a wait and see approach.
The Friday trade should be an interesting one in cocoa futures, as well as all global markets.