Cocoa futures at the New York Board of Trade on Thursday morning gapped higher on the daily bar chart, following a similar gap-higher move on Wednesday that saw prices close near the session high. Prices Thursday morning had hit a high of $1,644 as of this writing. The cocoa bulls are making a strong recovery from last week’s steep downdraft that saw a high of 5.5-month high of $1,696 a metric ton hit on Jan. 3.–only to see the March cocoa contract careen to a low of $1,585 by the end of last week.
The cocoa bulls have regained upside technical momentum and their next upside price objective is to produce a close above strong technical resistance at last week’s high of $1,696. A close above that key price level would open the technical door to a challenge of the contract high of $1,792, scored in July of 2006.
click on the chart to enlarge
On the downside, chart support for March cocoa futures is located at Thursday’s low of $1,629 and then at $1,624, which is the bottom of Thursday’s upside price gap on the daily chart. A close below solid technical support at this week’s low of $1,573 would produce some fresh chart damage and would deflate the bulls to suggest a fresh downtrend in prices in the coming weeks.
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