The range is formed by the 86.4 percent projection level of a wave C from $2,594 and the Aug. 15 high of $2,139. A break above $2,139 will lead to a gain to $2,209, while a break below $2,056 could signal the continuation of the downtrend towards $1,971.
Signals are very mixed. The wave pattern suggests a downside bias, as the wave C is capable of travelling to $1,971. However, the bounce from the Aug. 6 low of $2,035 is long enough to indicate a completion of this wave.
Regardless of the next direction, the following move could be sharp.
Note: Cocoa report will be published twice a week, on Wednesday and Friday.
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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.