Peter Smith
⬤ Cocoa futures just got hammered, dropping another 4.7% and smashing through the crucial 4,334 support level that traders had been watching. The daily chart tells the story—prices didn't just test this level, they broke right through it before showing the first hints of a rebound. Strong bearish pressure pushed cocoa into new short-term lows in the low 4,200s before things finally steadied out.
⬤ That 4,334 zone? It had been holding things together during recent consolidation. But once it gave way, sellers pounced and the bottom dropped out fast. We're seeing a bounce now, but it's pretty modest—more of a technical gasp for air than anything that signals a real trend shift.
The bounce could occur after such a sharp move lower, but this may only be a small technical reaction rather than a meaningful change in trend.
⬤ The bigger picture still looks rough. Cocoa's trading well below the descending trendline that's been defining this downtrend, and while the RSI's drifting toward oversold territory (which can spark short relief rallies), that alone doesn't flip the script. The next spot worth watching sits around 4,000, where horizontal support meets that downward-sloping trendline—basically a make-or-break zone.
⬤ What's this mean for cocoa? It shows how fast things can unravel once key support levels crack. Sure, you'll get bounces after sharp drops—that's just how markets breathe. But unless prices climb back above what they just broke, the pressure stays on. With cocoa now trading beneath that critical support, the next few sessions will tell us whether we're building a floor here or sliding toward that 4,000 target.
Peter Smith
