Cocoa prices have been consolidating within a range since mid-May 2024, fluctuating between the levels of $10,000 and $6,770. Despite some minor rebounds, the likelihood of cocoa breaking the $6,770 support level appears high. The commodity hit this low on August 7, followed by a small bounce. However, the broader correction, which began in April 2024 when cocoa peaked at an all-time high of $11,722, is expected to persist, potentially driving prices down to $6,000 or even below $5,000 in the coming weeks. Daily Chart AnalysisFrom a long-term perspective, cocoa completed a major bullish impulse wave cycle that started in September 2022 when prices were trading around $2,000. This powerful impulse wave, which aligns with Elliott Wave theory, propelled prices upward by more than 430%, eventually reaching an all-time high of $11,722 in April 2024. According to Elliott Wave principles, following such a substantial impulsive move, the market often enters a three-wave corrective phase. Cocoa is currently experiencing this corrective phase, unfolding in an a-b-c wave pattern. In this corrective structure, waves a and b (circled) have already completed. Wave a marked the initial decline from the all-time high, while wave b offered a brief rebound. The market is now deep into wave c, the final leg of this corrective phase. Wave c tends to be the most aggressive and is expected to extend lower, potentially reaching as far as $5,000 or below before the correction concludes. This decline is a natural outcome following the massive bullish impulse, and once completed, cocoa may resume its overall upward trend or experience a large corrective bounce.  H4 Chart AnalysisOn the H4 chart, the ongoing corrective decline can be further dissected into a 5-3-5 corrective pattern, typical of wave c movements. Wave c is currently in the middle of its third sub-wave, labeled wave (iii), which is usually the strongest of the decline. Given the current momentum, it is likely that the $6,596 support level will be breached, extending the selloff initiated from the $11,722 peak. The overall target for this wave remains near the $5,000 level, where support could potentially emerge, setting the stage for either a continuation of the long-term bullish trend or another corrective bounce.This scenario highlights the ongoing bearish momentum in cocoa prices, with key levels suggesting further downside before any significant recovery takes hold. More By This Author:DAX Index Elliott Wave Technical Analysis – Thursday, September 5
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