COCOA: Technical Analysis – Increased Ivory Coast deliveries bearish for cocoa prices

By IFCMarkets

Increased Ivory Coast cocoa deliveries bearish for cocoa prices

Cocoa deliveries to Cote d’Ivoire ports have increased compared with the previous season. Will cocoa prices continue falling?

Cocoa deliveries at ports in world’s top grower Ivory Coast reached around 1.94 million tons by August 20 since the start of the season on October 1, 2016, according to exporter estimates. Deliveries have increased more than 56.6% from 1.45 million tons in the same period of last season. Relative strength of the dollar is another factor negatively affecting cocoa prices.

On the daily timeframe the COCOA: D1 has been declining toward the support line after it retraced higher as it hit a ten year low in April.

• The Parabolic indicator gives a sell signal.
• The Donchian channel is tilting lower, signaling start of downtrend.
• The MACD indicator gives a bearish signal: it is below the signal line and the gap is widening.
• The Stochastic oscillator is edging up heaving not reached the overbought zone.

We expect the bearish momentum will continue after the price breaches below the lower Donchian bound at 1826.00 and the support line. This level can be used as an entry point for a pending order to sell. The stop loss can be placed above the fractal high at 1911.00. After placing the pending order, the stop loss is to be moved to the next fractal high, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (1911.00) without reaching the order (1826.00), we recommend canceling the position: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Market Analysis provided by IFCMarkets