brent harris elliott wave
futures market advisory service

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cocoa (jan. 31, 2009)

since the july-october 2008 decline in cocoa (3385-to-1867) failed to produce a highly bearish, "five-wave/impulse-pattern down", there�s still a slight chance that the bull cycle from the 2000 low is still in force. in which case, before a super bearish position is actually at hand, prices could stage a final advance to new highs (+3385). however, because the 2000-2008 advance did trace-out a "perfect", a-b-c pattern, complete with a b-wave/contracting triangle formation, i think the more likely scenario is that 7 �-year, super-cycle-(x) wave has already peaked. in which case, the only logical interpretation currently.... is that the advance from the october 2008 low (1867) is just a "corrective", cycle-wave-b. thus, once an [a]-[b]-[c]advance (from the october 2008 low) is traced-out, the stage will be set for one heck of a drop. note, that the upcoming, cycle-wave-c decline should produce a move to at least the next support cluster that is beneath the 2008 bottom, or a drop to 1710-1662 minimum. given that we are currently trading around the 2800 level, that�s a "downside potential" of more than $10,000 per contract. anyhow, in looking at the more immediate pattern, the final, [c]-wave section up appears to already be underway from the january 20 low (2340). in fact, since we now also appear to be in the "fifth-wave" section up, of a "nine-wave" count, it�s conceivable that the final, cycle-wave-b peak will be hit during the first, or second-week in february. so, while i do have good resistance a both the 2745-2805 and 2888-2916 levels, the best sell-zone is probably at 3021-to-3063. this area yields the 50%-76.4%-retracement combination from the 1977 and 2008 highs, and appreciations of 350%, 61.8% and 30.9% from the 2000, 2008 and 2009 low. finally, in the event a strong close above 3063 occurs, then we may have to figure that one more move-up to new highs is going to happen. in which case, the eventual top will likely be hit around the 3564-3582 level.

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