How High Can Cocoa Prices Go ?

Cocoa Futures--- Cocoa futures are trading higher by 24 points currently at 2172 in the May contract continuing its bullish momentum trading higher for the 2nd consecutive session reversing earlier losses as this market remains very strong in my opinion.

I have been recommending a bullish position over the last couple months around the 1990 level and if you took the trade the stop loss will remain at 1991 for the next 3 days, but then the chart structure will start to improve therefore lowering the monetary risk.

If you take a look at the daily chart there was a spike bottom that was created on December 22nd at 1812 & ever since that occurred prices have remained in a bullish trend as I still think were going to retest the November 10th high of 2235 in the coming days ahead as I see no reason to take a short position in this commodity at the present time. If the contract high is broken I think we could head substantially higher as I will be looking at adding another bullish position once the chart structure improves, but at the current time stick with the original trade as this by far is the strongest soft commodity out of the entire sector as coffee and orange juice remain very weak.

Cocoa prices are trading far above their 20 and 100 day moving average telling you that the trend clearly is to the upside as the volatility still remains relatively low as we continue to grind higher on a weekly basis, but historically speaking cocoa can become extremely volatile especially when political unrest in West Africa develops.




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