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Facts:
- EMA60 crossed above EMA200 and EMA100 from below
- EMA100 is narrowing the distance to EMA200 (from below)
- Price broke above the 100 level of the FIBO channel
- RSI [14] is at 66
Recommendation:
- Long position (buy) on COCOA at the market price
- Target price (Take Profit, TP): 8530
- Stop Loss (SL): 4575
COCOA (D1)
Source: xStation5 OPINION : The technical situation on the COCOA chart strongly indicates a gaining-momentum trend reversal after an extended correction. This is shown primarily by the behavior of the EMA averages and the FIBO levels. The price broke through resistance around ~5100 and is currently hovering around 6300, which is a favorable starting point for further gains. Fundamentally, the long position is contrarian, but it takes advantage of risk asymmetry on the supply side of the cocoa market. Quarterly publications by the International Cocoa Organization (ICCO) indicate that the 2025/2026 season may end with a surplus of around 415 million tons, which justifies the sharp decline from levels close to 10,000 a year ago. However, this surplus may be more fragile than it appears. Initial signals from Côte d’Ivoire (a key producer) indicate that harvests and deliveries are delayed. At the same time, Oxford Economics forecasts that a combination of El Niño effects and rising fertilizer prices could reduce yields by about 20% next year.
Methodology and assumptions:
- The recommendation is based on technical analysis of the chart, in particular EMA moving averages and Fibonacci levels, as well as fundamental analysis of the cocoa market.
- The target level was determined based on Fibonacci levels.
- The protective stop loss order was set based on a favorable risk-to-reward ratio, trend chanels and is based on a Fibonacci level.
