COCOA closes higher for the 2nd day in a row
Cocoa (COCOA) Technical Analysis Report for Jan 11, 2019 | by Techniquant Editorial Team
Moving higher for the 2nd day in a row, COCOA finished the week 0.47% higher at 2363.0 after gaining $10.0 (0.42%) today. Trading $24.0 higher after the open, the contract was unable to hold its gains as the bears took control ending the day below its opening price. Closing within the previous day's range, prices failed to decisively move beyond the prior day's trading range in a lackluster session.
Daily Candlestick Chart (COCOA as at Jan 11, 2019):
Friday's trading range has been $46.0 (1.94%), that's far below the last trading month's daily average range of $67.7. Weekly volatility is also lower, being way below the market's average weekly trading range. The longer-term, monthly volatility is currently slightly lower than usual for COCOA. Prices continued to consolidate within a tight trading range between 2327.0 and 2413.0 where it has been caught now for the whole last trading week.
One bearish candlestick pattern matches today's price action, the Bearish Spinning Top. The last time a Bearish Spinning Top showed up on Tuesday, COCOA lost -1.34% on the following trading day.
Prices are trading close to the key technical support level at 2327.0 (S1). The market ran into sellers again today around 2396.0 for the third trading day in a row after having found sellers at 2390.0 in the previous session and at 2387.0 two days ago.
Although COCOA is currently in a short-term downtrend, this could just be a correction, as both the medium and long-term trends are still bullish.
Buying might accelerate should prices move above the nearby swing high at 2413.0 where further buy stops could get activated. Selling might speed up should prices move below the close-by swing low at 2327.0 where further sell stops could get triggered. Further buying might move prices higher should the market test December's nearby high at 2439.0.
Among the seven market conditions that our pattern recognition engine identified today, the statistics for the Price Action based market condition "Bearish Intraday Reversal" stand out. Though it is usually interpreted as bearish, it has actually shown to be bullish for Cocoa. Out of 346 times, COCOA closed higher 52.60% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the long side has been after 10 trading days, showing a win rate of 55.49% with an average market move of 0.65%.
With three out of the other five Consumer Commodity Markets closing lower today, the ones that stand out on the negative side are ORANGE losing -1.27% and COTTON closing -0.42% lower. On the flipside the best performers have been SUGAR closing 0.8% higher and COFFEE gaining 0.05%. Read more