Technical Analysis #C-COCOA : 2020-06-11

Recommendation for Cocoa : Buy

Buy Stop : Above 2477

Stop Loss : Below 2314

Indicator Value Signal
RSI Neutral
Donchian Channel Neutral
MA(200) Sell
Fractals Buy
Parabolic SAR Buy

Chart Analysis

IFC Markets Tech Analysis

On the daily timeframe #C-COCOA: D1 is below the 200-day moving average MA(200) which is rising. We believe the bullish momentum will continue after the price breaches above the upper Donchian boundary at 2477. This level can be used as an entry point for placing a pending order to buy. The stop loss can be placed below 2314. After placing the pending order the stop loss is to be moved every day to the next fractal low, following Parabolic signals. Thus, we are changing the expected profit/loss ratio to the breakeven point. If the price meets the stop-loss level (2314) without reaching the order (2477) we recommend cancelling the order: the market sustains internal changes which were not taken into account.

Fundamental Analysis

Rainfall has been below average in the past week in Ivory Coast. Will the cocoa price rebound continue?

Lower than usual rainfall in Ivory Coast last week highlighted need for more rain to boost the crop. Ivory Coast is the world’s top cocoa producer. The International Cocoa Organization (ICCO) cut its forecast for global production by 74,000 tons to 4.75 million in its latest quarterly update on May 29. It forecast a global cocoa deficit of 80,000 tons in the 2019/20 season that runs from October to September. The estimate is slightly below its previous projection of 85,000 tons. ICCO forecast production in Ivory Coast to reach 2.15 million tons in 2019/20, down from a previous projection of 2.18 million. Data showed rainfall in both western and eastern regions of Ivory Coast were below the average last week. Lower rainfall in top cocoa producer country is bullish for cocoa price.