Cocoa moves back over $2,000 per ton, but it looks like it is preparing to fail again seeking alpha jpy usd yahoo


2017 has been a tough year for producers of cocoa and those who have looked to take advantage of falling prices by entering the market on the long side. However, for the world’s consumers, the primary ingredient in chocolate has been on sale.

Cocoa fell to lows of $1756 per ton on the nearby ICE futures contract during the second quarter of the year understanding futures markets pdf. Since then, the soft commodity has been trying to rebound, and last week the price rose once again above the $2000 per ton level. With technical support at just below $1800 and resistance around the $2200 per ton levels, $2000 has become a pivot point for the commodity that requires an equatorial climate to grow flower tattoo sleeve. However, over the past six months, each attempt above $2000 has failed, and the price has declined back down to the lower end of its trading range.

Cocoa has been in consolidation mode lately, and while many other commodities are looking bullish these days, it is a pretty good bet that cocoa is not yet ready to break out of its trading range, at least to the upside.

As the weekly chart of the U.S. dollar index highlights, the greenback has declined from 103.815 in early January which was the highest level since 2002, to lows of 92.68 on July 31 exchange rate rm to usd. The dollar index has fallen by 10.7% over the past seven months. Currency markets tend to move slowly over time. A move of over 10% in the reserve currency of the world is massive call and put options explained. The dollar is the benchmark pricing mechanism for most commodities prices improper fraction to a mixed number calculator. Therefore, on a historical basis, a weaker dollar should be bullish for the price of a commodity. Over the same period that the dollar fell, the price of cocoa declined from $2291 at the beginning of January to 2070 as of the end of July, a drop of 9.6%. The decline of cocoa while the dollar was heading lower is proof of just how weak the cocoa market has been over the past seven months.

As the daily chart illustrates, active month September cocoa futures have been trading around the $2000 level since March currency converter uk to us. The line in the sand on the upside currently stands at $2114, the June 13 highs. Above there, the March 21 peak at $2190 is a critical level of technical resistance for the price of September cocoa futures today’s conversion rate usd to inr. The price rose to a high of $2090 on Tuesday, August 01 which was a new short-term high, but it turned around and closed below the previous day’s low usd stock. The bearish key reversal trading pattern on the daily chart and momentum that has risen to overbought territory likely will lead to a return to price levels below the pivot point for cocoa futures over coming sessions.

The weaker dollar is supportive for the price of cocoa and other commodities. Abundant supplies and grinding data that is bullish in Asia but not quite as supportive in other areas of the world continue to weigh on the price of the critical ingredient in chocolate usd cad exchange rate chart. Source: CQG

The weekly chart highlights the bearish price move that began in late 2015 and picked up steam when cocoa fell below technical support at $2731 in September 2016. Cocoa entered a period of consolidation over recent months, but the weekly chart still shows a pattern of lower lows in May and June when it comes to the active month ICE futures contract. It is likely that cocoa will need a prolonged period of consolidation where it traded in a range from $1800-$2100 per ton, perhaps for the rest of 2016, to build cause to recover significantly from the price damage done since last September. September cocoa futures closed on August 1 at $2023 per ton putting in a bearish trading pattern on the first trading session of August. While cocoa spent a few days over the $2000 level, it looks like it is once again failing and will return to probe the lower end of its trading range. I believe the high odds play is that cocoa will continue to trade in its current range and will look great on the highs and terrible as it approaches the lows. I am not looking for an imminent breakout to the up or downside in the cocoa futures market, and it is likely that range trading will dominate price action over the coming weeks and months.

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