The Commodity Specialist view – The recovery in Cocoa from its Oct-08 low has been impressive. Interrupted by a period of volatility earlier in the year it has more recently returned to the Jul-08 peak, but displaying short term indecision now.
- MONTHLY CHART – CONTINUATION:
In 2008 the sharp drop found good support from near old highs of 2003-2005, with a long term 76.4% retracement level just below.
The 3385 peak has been retested, but it is currently unclear if bulls have the will yet to break decisively through. - DAILY CHART – MAR-10:
A preliminary indication that bulls were tiring was the Nov closes below the channel base.
This suggested any subsequent rally was more likely to precede another bear leg.
In the Commodity Specialist Guide we have been noting the 3360 76.4% bounce level as possible resistance and this has now been tested – we wait to see if bears can re-assert themselves from around here.
In any case, the official bear trigger won’t be given unless we see a close below the 3077 12-Oct correction low, which would also violate the 23.6% level of the whole recovery from Nov-08. Next target would then be the 2880/57 area, 38.2% and Feb-09 high. - In the Guide we had suggested aggressive sellers might favour the 3350 area for entry, stops at 3450. Now achieved, partial profits are targeted around 3100, with stops then reducing to cost. This strategy does, though, pre-empt the required confirming bear break.
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