Cocoa Futures Breaking Thru Support?

Today, Cocoa Futures prices reached a new recent low of 2943 (at the time of this post).  We are short Cocoa Futures with a Put option (at a 2850 strike price) we purchased back on March 25 (see our post:  Shorting July Cocoa on 1-2-3 Top Formation).

When we shorted cocoa futures with our put option, we didn’t wait to see if the 1-2-3 top formation was going to ‘firm up’.  Looking at the Daily Cocoa chart below, you can see that today’s low so far of 2943 is pretty close to the #2 point of 2922 in the VERY WIDE 1-2-3 top formation that eventually formed over the past several weeks.  Wide 1-2-3 top and bottom formations usually indicate a strong and prolonged move in the market.  We expect if/when prices break below the #2 point of 2922 our 2850 strike price put option should be in the money soon after.  Stay tuned!

Daily Cocoa chart  - July 2014

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