SINGAPORE: New York second month cocoa may rise into a range of $2,742-$2,928 per tonne next quarter, driven by a wave c.
This is the third wave of a bigger wave C from the April 2017 low of $1,756. The rally from this low is regarded as an extension of the preceding uptrend from the December 2000 low of $707, as the long-term correction from the 2011 high of $3,775 ended around $1,879, the 61.8% retracement of the uptrend.
Eventually, cocoa could revisit $3,775. However, this target is apparently too aggressive within a three-month time frame. A realistic target could be either $2,742, the 61.8% projection level of the wave c, or $2,928 - the 38.2% projection level of the bigger wave C.
Cocoa has briefly pierced above $2,480, after its first failure to overcome this barrier in December 2018. It is highly likely to break this resistance. Confirmation on a valid break will be when cocoa stands firm above $2,480.
A closer look at the daily chart shows that cocoa is struggling around this resistance. The current consolidation may end around $2,410, the 61.8% projection level of an upward wave -c- from $2,128.
This wave is expected to travel to $2,584, its 100% projection level. Once cocoa rises to this level, the break above $2,480 will be well confirmed.
Support is at $2,410, a break below which could cause a loss limited to the range of $2,302-$2,356.
* Charts are not available in reports received in email box through "Alert". To get charts, use the news code of to retrieve the original reports.
** Wang Tao is a Reuters market analyst for commodities and energy technicals. The views expressed are his own.
No information in this analysis should be considered as being business, financial or legal advice. Each reader should consult his or her own professional or other advisers for business, financial or legal advice regarding the products mentioned in the analyses. **
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