With much of the investing world’s attention divided between the political upheaval in North Africa and the Middle East, and the recovery progress in quake-stricken Japan, one market in particular is extremely susceptible to the turmoil in the Ivory Coast and may be an area for commodities traders to turn their focus in the near term.
The Ivory Coast is the world’s largest exporter of high quality Cocoa, and historically the outbreak of war in the country has led to high volatility in the Cocoa futures, often propelling the market higher on speculation of disruptions alone. As the tensions increase, buyers are encouraged to lock in prices and deliveries.
Cocoa futures are currently confirming major support near the $3,000 per ton price level, and appear to breaking higher from the Descending Triangle chart pattern shown here on the 240-minute time frame. This is a significant technical development that lines up well with the potentially bullish fundamental backdrop to encourage an outlook for higher prices.
A break of the Descending Triangle support at $2,930 per ton would negate the bullish projection for the time being, meanwhile any strength in the Cocoa futures is likely to confirm this ledge as long term support and encourage a rally.
(Source: http://www.fxstreet.com/technical/forex-strategy/daily-commodities-update-technical/2011/04/11/)
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