Cocoa - Bearish trend, bullish signals
Updated
Cocoa has been trending down for about a year after a H&S/Double top/failed Cup and handle, whatever you want to call that topping pattern. Price currently stands at a massive support area, the neckline of a 10 year old H&S.
The weekly indicators are starting to show bullish divergences. Although not there yet, as the impulse is still red, there will be strong divergences on both the MACD histogram and MACD lines if the impulse turns blue. The Force Index is already bullish, and soon the Weis Wave Volume will follow it.
The daily chart shows a possible future double bottom with a class A bullish divergence. Price has not closed above the previous swing low, but considering the bullish engulfing pattern, chances are high it will soon.
I have been building a position, I already have longs, about 50% of the final size. I am waiting for a blue weekly impulse and a close above the daily swing low of 1883.
As for targets, for the shorter term we should see cocoa at the 2300 area. Longer term, the area around 2700 looks promising.
Soft stop as always, this is currently an anticipation trade, using the daily chart to enter into a multi month trade, following a 10 year old pattern. You can't expect to place a hard stop one tick below the daily low and hope to catch a one year move. That is just foolish.
The weekly indicators are starting to show bullish divergences. Although not there yet, as the impulse is still red, there will be strong divergences on both the MACD histogram and MACD lines if the impulse turns blue. The Force Index is already bullish, and soon the Weis Wave Volume will follow it.
The daily chart shows a possible future double bottom with a class A bullish divergence. Price has not closed above the previous swing low, but considering the bullish engulfing pattern, chances are high it will soon.
I have been building a position, I already have longs, about 50% of the final size. I am waiting for a blue weekly impulse and a close above the daily swing low of 1883.
As for targets, for the shorter term we should see cocoa at the 2300 area. Longer term, the area around 2700 looks promising.
Soft stop as always, this is currently an anticipation trade, using the daily chart to enter into a multi month trade, following a 10 year old pattern. You can't expect to place a hard stop one tick below the daily low and hope to catch a one year move. That is just foolish.
Trade closed: target reached
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