{"id":10468,"date":"2024-02-14T08:34:41","date_gmt":"2024-02-14T13:34:41","guid":{"rendered":"https:\/\/ibkrcampus.eu\/uncategorized\/chart-advisor-cocoa-a-sweet-valentines-trade\/"},"modified":"2024-02-19T12:57:02","modified_gmt":"2024-02-19T12:57:02","slug":"chart-advisor-cocoa-a-sweet-valentines-trade","status":"publish","type":"post","link":"https:\/\/www.interactivebrokers.eu\/campus\/traders-insight\/securities\/macro\/chart-advisor-cocoa-a-sweet-valentines-trade\/","title":{"rendered":"Chart Advisor: Cocoa: A Sweet Valentine&#8217;s Trade"},"content":{"rendered":"\n<p class=\"wp-block-paragraph\">By&nbsp;<a href=\"https:\/\/links.investopedia.com\/u\/click?_t=36ba8fa8372241d58b3bfc06997a4332&amp;_m=ec34900c0b4f41758405a35f9ab8241c&amp;_e=lgQf6T827D9Xy4CkOP-ErKg-5GYTDw72bJVA0aQGeox1UPZ3OWn3CsJv0YYfLl3s9pKYuzjLMaI-c9NkHxkAyztsI_4t-eUyWMjrvOw6UQrE4965NN4U4jv8UI7S1VUasedrQ5LrXoF_3albUXOgtciHMe7JPSyWGpwawE5qB1wV8RCVScQNy5Benh82c_DsqUjErkFmlcQjSjT52z767AEz6eK6vWgzJdcdv8cKUb5kqJkjswf7P7tsKdJkHbaZ-zbGcvNXMFd49O42ZXw6Tuh_dova289harGBvuQIWQ5GvNG1_wBj7j1lcjqU0zecrGDGEhk-qdisEMqJt5WdIFbNfXESm86G82NvBsqTBdJB7zTz628-vtKIX-sBI2H7jvnIOoUmHdQbds-QhE9468bZI5iXbxu--YvYuV9gCfQo7xuPf5P8nksIautHxq21ImLWxib3bjSNcjIqB65e-5xnl9lHYYI4HyiMxkLP0Ig%3D\" target=\"_blank\" rel=\"noreferrer noopener\">Seth Hickle, CMT<\/a><\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><em>Investopedia is partnering with CMT Association on this newsletter. &nbsp;The contents of this newsletter are for informational and educational purposes only, however, and do not constitute investing advice. The guest authors, which may sell research to investors, and may trade or hold positions in securities mentioned herein do not represent the views of CMT Association or Investopedia. Please consult a financial advisor for investment recommendations and services.<\/em><\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-1-in-love-with-the-cocoa\">1\/ <strong>In Love with the Cocoa<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">The history of Cocoa Beans goes back thousands of years with roots dating back to the Mayan and Aztec cultures of Central and South America. Once used as a currency, medicine, and a stimulant, today as a society, we have a different use case for chocolate. Modern chocolate was introduced in the late 1800\u2019s and has now become a staple of the American discretionary diet.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.tradingview.com\/symbols\/ICEUS-CC1!\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Cocoa<\/a>&nbsp;prices have been climbing due to unfavorable growing conditions in West Africa where up to 70% of the world\u2019s cocoa supply is grown. This has pushed prices to levels not seen since the late 1970\u2019s. Record&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/ICEUS-CC1!\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">cocoa<\/a>&nbsp;prices ahead of Valentine\u2019s Day won\u2019t likely be too impactful in the short term on retail chocolate demand but will likely cause continual retail pricing pressure.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Below is a good visual representation of how skyrocketing commodities can cause headwinds for a company heavily dependent on commodities as an input for production.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Hersey\u2019s (<a href=\"https:\/\/www.tradingview.com\/symbols\/NYSE-HSY\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">HSY<\/a>) reported \u201cmixed\u201d earnings last week missing top line while exceeding bottom line Wall Street expectations. The company also guided lower than analyst expectations for full year 2024.&nbsp; However, keep an eye on&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/ICEUS-CC1!\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Cocoa<\/a>\/<a href=\"https:\/\/www.tradingview.com\/symbols\/NYSE-HSY\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">HSY<\/a>&nbsp;relationship. One day they may fall back in love instead of growing apart.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Forrest Gump\u2019s mama once said, \u201cLife was like a box of chocolates. You never know what you\u2019re gonna get\u201d. While those are wise words, they are not always true when we have charts that show us what we are going to get. But like Forrest, I am a simple man. In this case, we don\u2019t have to add any special indicators to tell us what is happening here.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"615\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1-1100x615.png\" alt=\"\" class=\"wp-image-10472 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1-1100x615.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1-700x391.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1-300x168.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1-768x429.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-1.png 1534w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/615;\" \/><\/figure>\n\n\n\n<p class=\"has-small-font-size wp-block-paragraph\">Past performance is not indicative of future results.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-2-every-rose-has-its-thorn\">2\/ <strong>Every Rose has Its Thorn<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">I am writing this piece as a reminder to myself that I need to buy my wife flowers for Valentine\u2019s Day. Let this serve as your reminder also. After doing some research I came across 1-800-Flowers (<a href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-FLWS\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">FLWS<\/a>). Naturally before placing an order, I am going to look at their chart.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">1-800-Flowers is not painting a very rosy picture. We can see the trend was positive but has been breaking down since the beginning of February as it crossed below the&nbsp;<a href=\"https:\/\/www.investopedia.com\/ask\/answers\/012815\/why-50-simple-moving-average-sma-so-common-traders-and-analysts.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">50-day Simple Moving Average (SMA)<\/a>. Right around the same time&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-FLWS\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">FLWS<\/a>&nbsp;was flirting with falling below the&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/trading\/09\/linear-regression-time-price.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Linear Regression Channel<\/a>. This weakness coincides with a mixed earnings report on February 1st.&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-FLWS\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">FLWS<\/a>&nbsp;beat on the top line but missed on revenue. Wall Street woke up and smelled the roses as heavy selling pressure sent the stock lower.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Another pattern that can help guide our opinion is a confirmed&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/d\/doubletop.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">double top chart pattern<\/a>. This bearish reversal pattern confirms a breakout to the downside with a breakout below the neckline on heavy volume. Trading reversed course after an attempt failed to pierce back above the neckline.&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-FLWS\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">FLWS<\/a>&nbsp;gapped down further, eroding in price. We can use the&nbsp;<a href=\"https:\/\/www.investopedia.com\/terms\/m\/measuring-principle.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Measure Principal<\/a>&nbsp;to formulate a downside target. In this case we take 73% of the highest peak to trough distance and subtract it from the neckline. As we can see&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/NASDAQ-FLWS\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">FLWS<\/a>&nbsp;is well on its way. Oops a daisy.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-\"><\/h2>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"615\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2-1100x615.png\" alt=\"\" class=\"wp-image-10471 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2-1100x615.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2-700x391.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2-300x168.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2-768x429.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-2.png 1534w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/615;\" \/><\/figure>\n\n\n\n<p class=\"has-small-font-size wp-block-paragraph\">Past performance is not indicative of future results.<\/p>\n\n\n\n<h2 class=\"wp-block-heading\" id=\"h-3-whatcha-doing-sweet-thang\">3\/ <strong>Whatcha doing Sweet Thang<\/strong><\/h2>\n\n\n\n<p class=\"wp-block-paragraph\">I will keep this one short and sweet.&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/ICEUS-SB1!\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Sugar No. 11<\/a>, where\u2019s it headed? Let\u2019s first look to see where it has been. Back in November there was sugar high at a little over 28 cents per pound. Coming into December and January those highs were reversed as sugar plummeted to the low of around 20 cents per pound. This represents a near 28% move from peak to trough. Since then, we have retraced almost 50% of the move down.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Now&nbsp;<a href=\"https:\/\/www.tradingview.com\/symbols\/ICEUS-SB1!\/?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Sugar No. 11<\/a>&nbsp;has stalled and has begun trading sideways in a defined trading range known as a&nbsp;<a href=\"https:\/\/www.investopedia.com\/articles\/trading\/08\/rectangle-formation.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">\u201cRectangle\u201d or \u201cBox\u201d pattern<\/a>. Eventually prices will break below or above the pattern.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\"><a href=\"https:\/\/www.investopedia.com\/articles\/trading\/08\/rectangle-formation.asp?hid=c9995a974e40cc43c0e928811aa371d9a0678fd1&amp;did=11944206-20240214&amp;utm_campaign=chart-advisor_newsletter&amp;utm_source=investopedia&amp;utm_medium=email&amp;utm_content=021424\">Rectangle patterns<\/a>&nbsp;are plagued with false and or premature breakouts. These are defined as minor breakouts above or below trend that quickly return to the defined range.&nbsp; If a breakout occurs with a gap the odds of a false retracement are reduced. Prices do not always have to touch the support and resistance zone resulting in a \u201cshortfall\u201d. Shortfalls can give us a clue as to the potential directions for a breakout.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">As a trader waiting for an opportunity can feel like an eternity. It is important to have discipline and a lot of patience. I have no idea where sugar is going so for this one, we wait and check back periodically to see how the chart plays out as we look for clues to the direction of the eventually breakout.<\/p>\n\n\n\n<figure class=\"wp-block-image size-large\"><img decoding=\"async\" width=\"1100\" height=\"615\" data-src=\"https:\/\/ibkrcampusdev.wpengine.com\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3-1100x615.png\" alt=\"\" class=\"wp-image-10470 lazyload\" data-srcset=\"https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3-1100x615.png 1100w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3-700x391.png 700w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3-300x168.png 300w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3-768x429.png 768w, https:\/\/ibkrcampus.eu\/campus\/wp-content\/uploads\/sites\/3\/2024\/02\/14.02-3.png 1534w\" data-sizes=\"(max-width: 1100px) 100vw, 1100px\" src=\"data:image\/svg+xml;base64,PHN2ZyB3aWR0aD0iMSIgaGVpZ2h0PSIxIiB4bWxucz0iaHR0cDovL3d3dy53My5vcmcvMjAwMC9zdmciPjwvc3ZnPg==\" style=\"--smush-placeholder-width: 1100px; aspect-ratio: 1100\/615;\" \/><\/figure>\n\n\n\n<p class=\"has-small-font-size wp-block-paragraph\">Past performance is not indicative of future results.<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">&#8212;<\/p>\n\n\n\n<p class=\"wp-block-paragraph\">Originally posted February 14th 2024<\/p>\n","protected":false},"excerpt":{"rendered":"<p>The history of Cocoa Beans goes back thousands of years with roots dating back to the Mayan and Aztec cultures of Central and South America. Once used as a currency, medicine, and a stimulant, today as a society, we have a different use case for chocolate. Modern chocolate was introduced in the late 1800\u2019s and has now become a staple of the American discretionary diet.<\/p>\n","protected":false},"author":186,"featured_media":10469,"comment_status":"open","ping_status":"closed","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"footnotes":"","jetpack_post_was_ever_published":false},"categories":[144,152,16,146,147,8,12,156,153,22,148,7],"tags":[1052,1053,1054,806,1055,755],"contributors-categories":[503],"class_list":["post-10468","post","type-post","status-publish","format-standard","has-post-thumbnail","category-commodities","category-europe-middle-east-africa","category-futures","category-macro","category-north-america","category-region","category-securities","category-south-america","category-stocks","category-technical-analysis","category-text-articles","category-traders-insight","tag-1-800-flowers","tag-cocoa","tag-hsy","tag-nasdaq","tag-sma","tag-sugar","contributors-categories-investopedia"],"pp_statuses_selecting_workflow":false,"pp_workflow_action":"current","pp_status_selection":"publish","acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v26.9 (Yoast SEO v27.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Chart Advisor: Cocoa: A Sweet Valentine&#8217;s Trade<\/title>\n<meta name=\"description\" content=\"The history of Cocoa Beans goes back thousands of years with roots dating back to the Mayan and Aztec cultures of Central and South America. Once used...\" \/>\n<meta name=\"robots\" content=\"index, follow, max-snippet:-1, max-image-preview:large, max-video-preview:-1\" \/>\n<link rel=\"canonical\" href=\"https:\/\/www.interactivebrokers.com\/campus\/wp-json\/wp\/v2\/posts\/10468\/\" \/>\n<meta property=\"og:locale\" content=\"en_US\" \/>\n<meta property=\"og:type\" content=\"article\" \/>\n<meta property=\"og:title\" content=\"Chart Advisor: Cocoa: A Sweet Valentine&#039;s Trade\" \/>\n<meta property=\"og:description\" content=\"The history of Cocoa Beans goes back thousands of years with roots dating back to the Mayan and Aztec cultures of Central and South America. Once used as a currency, medicine, and a stimulant, today as a society, we have a different use case for chocolate. 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