Brent Harris Elliott Wave
Futures Market Advisory Service

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Cocoa (Oct. 10, 2005)

Although the action over the past couple of months in cocoa has been somewhat confusing, BOTH the September and December contracts have closed BELOW the key 61.8%-retracement/support projection from the 2000 low AND the 44.1%-and-27.25%-depreciations from the 2003 and 2005 highs, or 1353-1341. Consequently, since the long-range pattern continues to look highly Bearish, we’ll remain focused on selling rallies. Aside from the fact that the long-term pattern indicates that a HUGE, 10-to-15-year BEAR CYCLE is in full force, the wave-progression from the 2003 peak indicates that waves-A-down and B-up have also already completed. In which case, BEFORE a more substantial, multi-month advance emerges, prices should trace-out AT LEAST a 5-wave decline from the March 2005/wave-B peak (1850); if not a 9-wave extension. To that end, since it does look like we are just in a wave-4 bounce now, within a 9-wave extension, our MINIMUM TARGET for wave-5 down is at the next lower support cluster, or 1214-1210. This area yields the 69.1%-retracement projection from the 2000 low, as well as 50%-and-34.55%-depreciations from the 2003 and 2005 highs. Overall, however, because I will NOT be able to interpret a completed wave-C at this level, it is highly likely that prices will end-up falling to EITHER the 1086-1034, OR 929-924 support level(s), i.e., before a substantial rally occurs. Anyhow, for now, traders should look to sell a rally to key resistance; at 1459-1463 basis the nearby contract. However, IF and WHEN prices drop to the 1214-1210 support zone, then the key resistance will be at 1323 and 1390-1411.
 

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