Recommendation for Cocoa:Buy
Buy Stop : Above 2580
Stop Loss : Below 2320
RSI : Buy
MACD : Neutral
MA(200) : Buy
Fractals : Buy
Parabolic SAR : Buy
Bollinger Bands : Neutral
Chart Analysis
On the daily timeframe, Cocoa: D1 went up from the downtrend and moved into the previous uptrend. A number of technical analysis indicators have formed signals for further increase. We do not rule out a bullish movement if Cocoa rises above the last maximum and upper Bollinger band: 2580. This level can be used as an entry point. The initial risk limitation is possible below the Parabolic signal, the last lower fractal, the lower Bollinger band and the 200-day moving average line: 2320. After opening a pending order, we can move the stop-loss following the Bollinger and Parabolic signals to the next fractal minimum. Thus, we change the potential profit / loss ratio in our favor. After the transaction, the most cautious traders can switch to the four-hour chart and set a stop-loss, moving it in the direction of the trend. If the price overcomes the stop-loss (2320) without activating the order (2580), it is recommended to delete the order: there are internal changes in the market that were not taken into account.
Fundamental Analysis
Cocoa production in Côte d’Ivoire may decline due to the lack of electricity. Will the Cocoa quotes rise? State electricity supplier Compagnie Ivoirienne d’Electricite has reported cutting electricity supplies in Côte d’Ivoire to 12 hours every 2 days for the next two months. This can reduce the processing, transportation and grinding of the cocoa beans. The main reason for this decision was the drought in West Africa and the reduction of hydropower resources at six hydroelectric power stations owned by the company. So far, there have been no reports from farmers that drought could damage the cocoa crop in Côte d’Ivoire. If such information nevertheless appears, then this may provoke an increase in quotations, since this country grows about a third of the world’s cocoa beans. The share of all of West Africa in world cocoa production exceeds 70%. In addition, there are many net-short open positions of cocoa on the London Stock Exchange. Their volume is now at its maximum in 9 months. If these exchange positions close, the quotes may have an upward impulse. In addition, the National Confectioners Association of Cocoa Bean Processors notes a recovery in chocolate demand. At the end of the Q1 of 2021, beans processing in North America increased by 2%, and in Asia - by 3.1%.