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Cocoa Reversal Coming?


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Cocoa has been trending higher since its Aug 16th low @ 1834 on the Dec contract. This recent uptrend has a dominant MM with medium deep retracement and 1:10 left-handed skewing. The supporting1 MM has very deep retracement with 1:5 left-handed skewing. Together their Fib projections create my Fade Zone (2134 to 2468). Because both retracements are larger than 50%, I consider this a weak uptrend that should produce a nice downside move if a high is established within it. In addition, there are 3 more supporting MM's that provide Fib extensions of their own that are helping to narrow down my Fade Zone. Currently, I'm focusing on the following range for a potential short trade...2174 to 2322. This range could shrink or shift upwards as price action develops.


Here's what's currently supporting a possible reversal:

-Medium Deep or worse retracements on all 5 MM's

-Left-handed skewing on 3 of the 5 MM's

-Shrinking time ranges on the 5 MM's

-Monthly R2 pivot inside the Fade Zone

-3/21/17 Swing High @ 2212 that could serve as possible resistance

-Historical seasonal weakness from Oct to late Nov

What's next? I will be looking for more clues of a possible reversal once price action enters the 2174 to 2322 Fade Zone.

cocoa



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I'm currently a middle office analyst for a proprietary trading firm with a BS in finance from the University of Illinois (Champaign-Urbana). I have 20+ years of experience in this industry ranging from working on the trading floors of the CME and CBOE, working in back-office operations, managing a clearing department, trading equities for a prop firm, and trading futures for my own account.  I analyze 30 different futures markets on a daily basis in the following sectors: grains, softs, meats, metals, energy, indexes, interest rates, and currencies. All of my market analysis is technical-based and looks for key areas of support and resistance that could either provide solid reward to risk trades or identify areas for profit-taking.

If you are interested in more of my market analysis, then please visit my blog @ http://tbillstrading.blogspot.com/.  I also provide a subscription-based daily newsletter called "Technically Speaking".  Please contact me @ tbills.trading@gmail.com for more information.

Disclaimer: There is a high risk of financial loss in stocks, futures and options trading. Past performance is not necessarily indicative of future results. Nothing in this newsletter is intended to be a trading recommendation for you to buy or sell stocks, futures, or options. 

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