Short Term Recovery in Cocoa Underway

The slump in Cocoa prices from a July high has come to a temporary halt near supports on the long term chart. Following an initial recovery we consider what further upside scope there is, before resistance gets tougher.

• WEEKLY CHART – CONTINUATION: Note how the fall from a 3385 peak halted near old highs from 2003/2005, and not much above the 76.4% level of the 2004-2008 rise just below 1800. These levels currently underpin the s/term recovery in progress.
• DAILY CHART – MAR-09: The recent break/close above the 2209 29-Oct high and 2256 Mar low was a s/term bull sign. Subsequent slip back does not concern, although ideally the s/term support from around the 2108 19-Nov high can hold, for better momentum, - otherwise the small rising channel base projection (1975 just now) needs to support a deeper dip. We initially target the 2454/99 area, 61.8% and 15-Sep low. Falling resistance is nearby too.
• Buyers will ideally have initial stops below the 1975 level, looking to raise to just below 2108 after a break above the small channel top (2235). At least partial profits would be taken near the 2454 61.8% level. [For the complete and illustrated version of this and future Updates be sure to sign up at www.sevendaysahead.com]