Technical Analysis #C-COCOA 10-10-2016 by IFC Markets
Cocoa exports from Cote-d’Ivoire suspended
In Cote-d’Ivoire which is the world leader in cocoa production a failure of SYDORE system to order beans has occurred. As a result, exports from San-Pedro and Abidjan harbors in Cote-d’Ivoire have been suspended. Will cocoa prices rise?
Coffee and Cocoa Council believes the system failure could be coming from tax imputation. Another growth factor for cocoa prices may be the significant weakening of the British pound as significant volumes of cocoa beans are traded in London. Moreover, the government of Cote-d’Ivoire raised for the local farmers the minimum purchase price by 10% in season 2016/17. As a result, several companies engaged in export supplies lacked financing. Moreover, cocoa prices edged lower in September due to rainy weather in Cote-d’Ivoire which leads to higher crops.
On the daily chart Cocoa: D1 is correcting up from the support of the sideways channel which has not been left. Prices may rise in case of worse weather in Cote-d’Ivoire and Ghana as well as in case of further delay in export.
- Индикатор Parabolic демонстрирует сигнал к понижению.
- Bollinger bands have contracted which means lower volatility. They are slightly tilted upwards.
- RSI is below 50 having formed positive divergence.
- MACD gives bullish signals.
The bullish momentum may develop in case cocoa breaks up through the line of the downtrend and surpasses the last fractal high at 2810. This level may serve the point of entry. The initial stop-loss may be placed below the Parabolic signal and the last fractal low at 2690. Having opened the pending order we shall move the stop to the next fractal low following the Parabolic and Bollinger signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. The most risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop-loss level at 2690 without reaching the order at 2810 we recommend cancelling the position: the market sustains internal changes which were not taken into account.
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