Short Squeeze In Cocoa?
Axi | May 31, 2017 12:09
Originally published by AxiTrader
COCOA - While the overall downtrend remains intact, there has been a notable rally in Cocoa today. The commodity is now approaching a key resistance level at $2087, and a break above that figure would pave the way for another test of $2182. Given that the market is mostly short Cocoa, there is potential for a larger squeeze in the near-term.
COFFEE continues its consolidation. It has started to recover following the bounce off $127 support, but still lacks momentum. Further, there is decent resistance noted at $134 (near the 50 % Fibo of the April decline), followed by the area between $136 and $137. Coffee is likely to struggle in the near-term, and further consolidation between $127 and $137 seems likely.
COPPER is currently trading within a descending channel. While the commodity has found strong support ahead of the 200 DMA, resistance above $2.60 proved to be too strong. The short-term outlook is mixed, and trading the range the preferred strategy. Watch for key support ahead of $2.50 and at the 200 DMA, while resistance lies at $2.60 and $2.63.
GOLD has run out of momentum above $1260, but remains fairly bid. Decent support can be expected ahead of the $1250 level, with significant support then seen around $1242, where the 200 and 21 DMA lie. Overall, buying dips is the preferred strategy in the near-term. It would need a clear break back below the 200 DMA to change that.
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NATURAL GAS still lacks volatility and there have not been many trading opportunities in the past few trading weeks. A break below $3.10 support would be interesting, as it would signal that a further correction until $2.90 is likely. Until then, there are better commodities to trade than NAT GAS.
SOYBEAN saw plenty of volatility recently. It fell below the significant support level at $930, and a further decline towards the 2015 low at $843 seems likely. Selling rallies is the preferred strategy, and strong resistance can now be expected at the former support level at $930.
WTI is consolidating around the 200 DMA. The short-term outlook is mixed. The topside was capped ahead of $52, but there is no clear bearish bias as long as WTI is above $48. Keep an eye on that level, and $51 to the topside.
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