- The price of Cocoa closed yesterday’s trading near 9946.0 USD per metric ton.
- Last Thursday the commodity began its trading near the 8435.0 ratio and touched a low of almost 8200.0.
- If you are new to the Cocoa story the gain may look rather intriguing but not get much interest beyond a slight shrug of the shoulder.
However, one year ago Cocoa was trading near the 2845.0 USD mark. The price velocity of Cocoa has been electric while moving upwards; the price velocity of the commodity when it decides to turn lower could be equally fierce.
The rocket ride in Cocoa touched the 10133.0 level this Tuesday, this before the commodity fell to nearly 9320.0 USD yesterday. Choppiness ensued after the low, but by the end of yesterday’s trading Cocoa was well above the 9900.00 price. Speculators contemplating a day trading wager in Cocoa will need steel stomachs and deep pockets if they plan on allowing their wager to trade towards their desired targets.
Realistic Targets and Irrational Value in Cocoa
Cocoa comes from a tree. It is not mined from the ground. While there are people who point to weather changes, poor tree stock, weak harvests and strong demand as reasons for the rise in prices, the question that begs is, should Cocoa be more valuable than Copper? The market certainly is the place where price is determined, but the fact that Cocoa traded above 10000.0 USD per metric ton earlier this week is rather startling.
While most people are surprised by the extremely high price in Cocoa, the rocket ride upwards may not be finished yet. The ability to close within sight of highs and reverse off a low this week shows there is still a speculative taste for taking the price of Cocoa higher by some major players. Yet, the question if the value of Cocoa is realistic is logical. The likely answer over the long-term – discounting inflation – is that the price of Cocoa should start to see selling pressure. But when the downturn will start to occur could prove to be a very expensive speculative bet. Good luck to all who are wagering.
Stepping in Front of the Moving Cocoa Train
Day traders who do not have money to lose should not be wagering on Cocoa. The commodity is moving fast and while it certainly would be an entertaining way to spend 15 minutes, one hour or a day’s time, betting on Cocoa could also cause health complications if risk management has not been used properly.
- Cocoa is still within sight of the 10000.0 USD mark, psychologically this is a likely target where take profit orders are geared by many large speculators who want to literally say they got out of their trades at this level.
- There are absolutely no guarantees that Cocoa will hit the 10000.0 mark again, but there are no guarantees that it will not surpass this price level.
- Having gained more than 10% of value in the last week of trading, the commodity may appear priced too high, but speculators could drive Cocoa to new record values.
Cocoa Short Term Outlook:
Current Resistance: 9990.0
Current Support: 9740.0
High Target: 10200.0
Low Target: 9080.0
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