SINGAPORE: New York cocoa may test a support at $2,400 per tonne next quarter, a break below which could cause a fall into a range of $2,177-$2,300.
The contract is riding on a wave C from $2,821, which is the third wave of a corrective wave cycle from the February, 2020 high of $2,935.
This wave may travel into a range of $$1,978-$2,300, formed by its 100% and 61.8% projection levels. Three smaller waves make up this wave C.
So far, only two small waves have unfolded. The third wave labelled c is travelling towards $2,177-$2,300 range. Resistance is at $2,499, a break above which could lead to a gain to $2,622.
The bearish wave count has to be reviewed, however, once cocoa breaks $2,622, as such a break could signal the extension of the uptrend from the July 2020 low of $2,092, or the uptrend from the April 2017 low of $1,756.
On the daily chart, a retracement analysis on the uptrend from $2,092 to $2,821 reveals more precise supports and resistances.
The bounce triggered by the support at $2,370, sharp as it was, has been deeply reversed. The reversal signals a continuation of the wave c towards $2,217, its 100% projection level.
Cocoa may fail to break the support at $2,370 in its first attempt, as this support is enforced by another one at $2,389. A moderate bounce towards $2,457 may be triggered before the downtrend resumes.
Charts that are not available in reports can be received in email box through "Alert".
To view charts, use news code to retrieve the original reports.
Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
Comments
Comments are closed for this article.