After trading in heady heights in late November above $2,700, Mar-21 NY cocoa returned to a $200 range from $2,460 to $2,660 through most of December and into early January. Save for a modest runup in late December, the contract has continued to find resistance around its 20-day moving average.
This continued last week, with the contract trending lower, and into this week, with the contract trading narrowly below the 20-day average under $2,340 and medium-term resistance around $2,525. The contract tested the 20-day average near $2,535 this Wednesday before closing unchanged from Monday’s open and up only marginally from the Tuesday close.
The trade has cited further potential for pandemic pressure on demand as a bearish factor. A modest rally for the U.S. dollar index in recent sessions, including closes above its 20-day moving average for the first time since early November, may also be adding modest pressure to NY cocoa.
Mar-21 London cocoa is showing a similar patter, though it only managed a close straddling its 20-day average on Wednesday. Its technicals are more ambivalent, with RSI neutral to bullish, MACD nominally bearish, and MACD modestly bullish. Given uncertainty over lockdowns and the potential for demand destruction, the contract may remain in the lower end of its one-month range.