Chart of the day

Where do we stand fundamentally?

The prices in New York are based on the South-Asian market and prices in London are based on cocoa from Africa. The size of each cocoa contract on the NYMEX is 10 metric tons. The biggest producers of cocoa are Ivory Coast and Ghana which together account for more than 60% of the world’s output. Other major producers include Indonesia, Nigeria, Cameroon, Ecuador, and Brazil. The biggest driver of an upside rise in prices is a cut in production and an increased world demand for Cocoa.

Cocoa is pulling back from the high of 11760 and pulled back in the fourth wave. That would be a completion of a fourth wave pullback before another extension higher in the fifth wave. After this bounce from 8000, I am expecting a new test of 11760.

Support for an upside extension and a test of 11760 again is as said 8500-8800 zone and an invalidation level of a fifth wave extension higher is 8000. Only a confirmed break above 11760 after the bounce from 8000 is required for a continuation higher.

_{Look for a long trade entry with a stop loss below 8500.}