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Cocoa Futures: Keep It Simple
Just how many indicators do you have to watch to get an idea of where cocoa prices are headed?
Cocoa futures appear trapped in a freefall.
After a period of sinking prices, the commodity dropped again today (May 13), hitting a one-week low. The important question is: how far does this current slide have to go, and when will it turn?
The answer is – it all depends on whom you ask.
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If you ask the mainstream financial analysts, this is your answer: “There's commodity weakness pressuring cocoa – it's dollar-related…” (Bloomberg)
What they mean is that the U.S. dollar has gotten stronger lately, which makes commodities less attractive as an investment compared to the dollar itself. Therefore, investors are pulling money out of cocoa and putting it into dollar-related positions.
That may be so… but wait. Does this mean that to figure out where cocoa is headed, not only do you have to stay on top of what's going on with cocoa itself, but also monitor cash flows and forecast prices of U.S. dollar-related securities?
Yep.
Now, let's try and ask Elliott wave International's Daily Futures Junctures what is happening in Cocoa. The answer is very different – and simple. Mike Boysen – filling in for DFJ's regular editor Jeffrey Kennedy – gives readers short, simple answers in tonight’s (May 13) DFJ:
"Despite yet another deep retracement into Monday's high, bearish near-term [Elliott wave] patterns remain intact."
That’s just a one-line answer, but there is more to it. Mike Boysen’s complete analysis of cocoa's price action in the May 13 DFJ is full of insight into what Elliott wave patterns in this market reveal – and what trends you can expect over the coming days and weeks.
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