Commodities

Technical Analysis – Cocoa futures unable to jump above 38.2% Fibonacci; bullish move is expected

Posted on July 6, 2018 at 12:02 pm GMT

Melina Deltas, XM Investment Research Desk

Cocoa futures for September delivery have reversed to the upside over the last three weeks after the rebound on the 2313 support. However, the price is still trading below the 38.2% Fibonacci retracement level of the upleg from 1796 to 2930 at 2500, which seems to be acting as a strong resistance barrier, setting the scene for a sideways move.

Momentum indicators in the daily timeframe are currently moving near their neutral levels with weak momentum. Specifically, the RSI indicator is holding marginally below the 50 zone, while the MACD oscillator is approaching positive territory and stands above its trigger line. So, the indicators seem to be in confusion for the next movement in price.

Should the price decisively close above the 38.2% Fibonacci of 2500, it could extend its upside movement towards the 2555 resistance, taken from the peak on June 20. Further advances above this area could then target the zone around the 23.6% Fibonacci near 2666 and provide more confidence to traders for a bullish tendency.

On the other side, a decline could meet the region around the 50.0% Fibonacci of 2365, which the market was unable to violate in the previous days. Slightly lower, the price could challenge the 2313 support, before more bearish movement shifts the focus to the 61.8% Fibonacci of 2232.

Overall, the commodity seems to be neutral in the short-term as it is developing within a narrow range with an upper boundary the 2555 resistance and a lower boundary the 50.0% Fibonacci near 2365.

Cocoa futures commodities

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