COCOA (SEP3)

Cocoa prices might be forming a short/medium-term base at the long-term trend channel support. Cocoa had sharp and wide swings over the past decade. The uptrend remained intact as it can be seen from the upward sloping trend channel. In the beginning of 2011, price reversed from the upper boundary of the trend channel at 4,000 levels and reached the lower boundary at 2,000. Since then the soft commodity has been consolidating above the long-term trend channel support. With this week’s breakout above 2,400 levels Cocoa might be forming a cup & handle chart pattern, usually regarded as a bullish chart formation that could target 2,800 levels. In the short-term technical outlook on Cocoa turns positive. As long as price remains above 2,400 levels, the soft commodity will have an upward bias.