Cocoa Bulls Struggle at 76.4% Level
20 August 2009
The 76.4% retracement level has often been useful when reading the Cocoa (ICE) charts. Recently an upswing on the Daily chart lost momentum upon reaching a medium term 76.4% level and we are on the lookout for a pullback phase now.
MONTHLY CHART - CONTINUATION:
The 76.4% level of the 2004-2008 rise, near 1800, was close to old highs from 2003/2005 and provided good support last year.
On this continuation chart the medium term 76.4% recovery level is at 3027, somewhat higher than on the front month.
DAILY CHART – DEC-09:
The 76.4% rebound level provided clearer resistance on the old Sep-09 chart, but here price definitely struggled to break higher from this area.
A bull channel top has also provided nice resistance – the 3000 area looks tough to crack.
In the Commodity Trading Guide we said that a close below the 2811 29-Jul low would encourage a down-phase – we think this should be the case, the subsequent strong bounce notwithstanding.
Note potential support from 2580, a small 76.4% pullback level, ahead of the channel base at 2480, and 2450 25-Jun low.
In the Guide we suggested that, following a close below 2811, sellers may favour entry on any subsequent bounce back to at least 2900. Taking into account the 3027 76.4% level on the long term chart initial stops may be favoured above here, say 3040, targeting 2600 for partial profits then lowering stops to cost. Should the channel base break then next profit target would be the 2400-2350 area.
Next story:
Bears in USD/CHF Are Losing Interest 
Previous story:
Cable rally hits the buffers but sellers should be