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With this, it's amply clear that price are still consolidating but the correction is over. The consolidation from a structure perspective looks incomplete and seems to have few more years before it's complete and starts the marches towards new highs. So from a trading and investment purposes, this provides us a good idea about where the prices are, so let's review how can this be traded or invested:
Structure review:
We will follow the chart on the weekly to monthly basis and continue to update in the coming weeks and months.
CoCoa : sweet to savoury?
Published on February 20, 2021
Symbol and Ticker
Cocoa is traded on major trading exchanges in US and London. The ticker that we are using here is of NYMEX i.e. CC1! ( continuous contract ). Native to Amazon Basin, countries like Ivory Coast, Cameroon, Brazil, Indonesia, Ghana, Nigeria are the major producers of Cocoa and countries like Netherlands are the larger processor of cocoa. The most common product that we see from cocoa beans is chocolate, followed butter and various forms of liquor, etc.
Long term structure review
After reviewing the long term chart of Cocoa, here is our interpretation of what has happened and will likely happen in the next few years. Again, this is a long term interpretation but the time is right to take few good calls.
- Prices peaked in 1977 while trading at $5359 ( see the chart below )
- Since then, it started in correction mode and made lows in Year 2000 while trading at $707.
- Starting from year 2000, prices starting rising and made near term highs in year 2011 and then subsequently lower highs in year 2018. Such a price action can confidently marked as consolidation.
- From 2018 lows, prices spiked up again and found support in July 2020.
- Very long term ( 5 to 7 years +) = very Bullish
- Long term ( 2 to 4 years ) = longer consolidation continuation
- Short term ( coming months to 2 years approx ) = bullish
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