Just a reminder, these charts are posted as examples of the trades on the nightly COT Signals email. These trades will help illustrate the mechanics that go into creating the nightly email.
May cocoa has been selling off since the beginning of the year. Throughout this time, Commercial momentum has remained positive while our proprietary trigger has fired off two losing trades on the long side.
Yesterday, the market formed a classic technical reversal bar. The market made new lows for this move by just a small margin early in the morning. Then, spent the entire day rallying and closing above the previous day’s high.
This is classic behavior of a “sold out,” market. The market moves lower in anticipation of continuation of the trend, only to find that the market is too low to attract fresh sellers. A close today above 2890 would force late coming short sellers to run for cover.
Any questions, please call.
Andy Waldock
866-990-0777
