Double Hammer Formation on COCOA Daily Chart Signals Strong Buy
27 June 2024
In today's analysis, let's revisit COCOA, a commodity that saw a phenomenal upswing in the first half of 2024. The price skyrocketed from $4,200 to over $11,000 by mid-April. Since then, however, COCOA has entered a correction phase. Recently, the price encountered significant support at the white horizontal area around $6,700. This level was tested in May, resulting in a notable bounce, and now we are witnessing a similar reaction.
The recent bounce can be attributed to the formation of two hammer candlesticks on the daily charts—one on Tuesday and another on Wednesday, both highlighted in yellow. Hammer candlesticks are bullish reversal patterns that suggest a potential end to the current downtrend. The fact that we have two consecutive hammers over key support levels significantly strengthens the bullish case. These patterns indicate that buyers are stepping in to defend the $6,700 level, suggesting a renewed upward momentum.
From a technical perspective, the presence of these hammers over the critical support area indicates a strong buy signal. The orange area below the current price serves as a vital support zone. As long as COCOA remains above this orange area, the bullish sentiment is likely to prevail. Traders should keep a close watch on these levels to confirm the sustainability of this bounce. A sustained move above the $6,700 support could lead to further gains and potentially a resumption of the uptrend that characterized the first half of the year.