Technical Analysis #C-COCOA : 2018-08-24

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IFCMarkets Technical Analysis
IFCMarkets Technical Analysis

Cocoa pod eating worm outbreak in Ghana is bullish for cocoa price. Will the cocoa price continue rising?

Ghana cocoa harvest may suffer significant loss as a pod-eating warm outbreak has developed in southwestern regions of the country. Ghana is the second top world cocoa exporter, producing about 20% of global cocoa bean output. Southwestern region accounts for about 55% of country’s cocoa production. Lower expected cocoa crop in the world’s No. 2 producer of the commodity is bullish for cocoa price.

Cocoa price

On the daily timeframe the COCOA: D1 has been rising and is currently testing the 200-day moving average MA(200).

  • The Parabolic indicator has formed a buy signal.
  • The Donchian channel indicates uptrend: it is tilted up.
  • The MACD indicator gives a bullish signal: it is below the signal line and the gap is narrowing.
  • The Stochastic oscillator is in the overbought zone, this is bearish.

We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 2339. A price above that level can be used as an entry point for a pending order to buy. The stop loss can be placed below the lower Donchian bound at 2100. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (2100) without reaching the order, we recommend canceling the order: the market sustains internal changes which were not taken into account.

Technical Analysis Summary

Position Buy
Buy stop Above 2339
Stop loss Below 2100

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