Cocoa to Greenback inverse relationship

2-22-13 CO.jpg What the greenback does ultimately the cocoa market does the opposite. This is not definitive but if you were to overlay the 2 charts it would look like a mirror image. Being the US dollar has appreciated 3.2% in the 3 weeks it is no surprise that cocoa has depreciated 7.8%. Of course there are other underlying factors such as a large crop and potential seasonal factors, lack of demand, etc. What I have noticed over the years is there is an inverse relationship…I am not of the opinion this could be used on a day trade or scalps but for overall trends their seems to be an inverse relationship.
That being said I do feel the dollar is overextended to the upside and cocoa to the downside. I have advised scaling into bullish exposure in recent weeks. Stockastics on the daily chart as seen above are screaming over sold and as of this post we are probing the 9 day MA; identified by the red line. Further confirmation would play out on a trade above the 20 day MA; identified by the light blue line.
While I am not as bullish as I was several weeks ago I do still see it a viable possible we trade north of 2300 in May futures I the coming week/months.
To discuss in more detail this chart or any other you can reach me at: mbradbard@rcmam.com or 954-929-9997
Risk Disclaimer: The opinions contained herein are for general information only and are not intended to provide specific investment advice or recommendations and are not tailored to any specific’s investor’s needs or investment goals. You should fully understand the risks associated with trading futures, options and retail off-exchange foreign currency transactions (“Forex”) before making any trades. Trading futures, options, and Forex involves substantial risk of loss and is not suitable for all investors. You should carefully consider whether trading is suitable for you in light of your circumstances, knowledge, and financial resources. You may lose all or more of your initial investment. Opinions, market data, and recommendations are subject to change without notice. Past performance is not necessarily indicative of future results.

No comments yet.

Leave a Reply