Trade of the week: short NY cocoa
For technical reasons we would like to go short NY cocoa with a stop loss at 9,700 and a downside target in the 8,000 region.
(Video transcript)
This week's trading opportunity
Axel Rudolph: Hello and welcome to "Trade of the week" on Monday 12th May, 2025. And let's have a look at today's trade, and it's a difficult one to pick because, basically, markets are a bit wild now that China and the US seem to be talking about a possible trade deal and having both lowered their tariffs in the meantime.
So, my trade won't look at the US dollar or gold or indices because all of those have rallied or have moved very, very sharply overnight. But what I would like to look at is New York cocoa, as you can see on the chart, the futures contract has basically tested resistance, just below 9,500 on this Daily Financial Bet, several times in April. And we are currently testing the downtrend line.
And it looks to me that, once again, we could fail in this area and then perhaps head back down again towards the 8,000 zone where it was trading for most of March. So, for that reason, since the medium term trend is still pointing lower and we're close to resistance, now, ideally, that resistance around 9,450-9,500. But because we're close to that and also at the downtrend line, I expect further downside to be seen rather than that resistance area to be broken through.
And that technical reason gives me the confidence to go short on New York cocoa at around current levels, ideally, if you can, if we do see a further bounce, around 9,450 or so with a stop-loss around 9,700.
So, this week's "Trade of the week" is to go short New York cocoa futures around current levels up to perhaps 9,450 or so, with a stop-loss around 9,700 and a downside target at around 8,000.
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