Details - Prices breached 8626 to confirm the progress of wave c (circled). Further sell-off is expected toward 5,000. Wave (ii) appears to be resisted below 9,000. Thus, wave (iii) downside is favored.

The current movements in the cocoa market illustrate a clear downward trend. Cocoa is approaching the lows seen in May 2024, continuing its fall from the record high reached on April 19, 2024, at 11,722. Since that peak, the commodity has dropped by 30%. This downtrend is anticipated to continue, potentially bringing prices down to the 5,000 mark in the upcoming weeks.

Daily chart analysis

A close analysis of the daily chart shows that cocoa completed a significant bullish impulse wave cycle starting in September 2022, when prices were around 2,000. By April 2024, this impulse wave had increased prices by over 430%, reaching the all-time high. According to Elliott Wave theory, impulse waves are usually followed by a three-wave corrective structure. The current decline from the all-time high is thus seen as a corrective phase, expected to develop in an a-b-c wave pattern.

In this scenario, waves a and b (circled) have already finished, and the price is currently in wave c. Projections suggest that wave c will likely extend to 5,000 or lower before the bullish trend potentially resumes. This expected decline is consistent with the typical behavior of corrective waves following an impulsive move.

H4 chart analysis

The H4 chart offers a closer view of the sub-waves within this decline, showing a potential 5-3-5 corrective structure. In this structure, wave c is currently in its 2nd sub-wave, wave (ii), which seems to have completed below the 9,000 mark. The price is expected to break below the 7,000 level to continue its decline towards the 5,000 target. However, any further extension higher for wave (ii) should be limited below the 10,323 high, preserving the integrity of the corrective pattern.

Summary

In summary, the Elliott Wave analysis indicates that cocoa is in the midst of a substantial corrective phase following its all-time high in April 2024. The key levels to monitor include the 9,000 mark, which wave (ii) has already dropped below, and the 7,000 level, which could indicate the continuation of the decline. The ultimate target for wave c is projected around the 5,000 mark, aligning with the typical behavior of corrective waves. This analysis highlights the importance of closely observing wave structures and key price levels to predict future movements in the cocoa market, offering valuable insights for both short-term and long-term trading strategies.

Technical analyst: Sanmi Adeagbo.

Cocoa Elliott Wave technical analysis [Video]

Author

Peter Mathers

TradingLounge

Peter Mathers started actively trading in 1982. He began his career at Hoei and Shoin, a Japanese futures trading company.

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.