COCOA: The Unfilled Gap & The Solitary DancerThe Philosophy: Dancing to Your Own Tune
In the grand orchestra of the markets, it is easy to get lost in the noise of the crowd. We are all playing different instruments, adhering to different rhythms and frequencies. Yet, together, we form a chaotic but beautiful composition.
However, when it comes to execution, you must be a soloist. I often repeat, there is nothing new under the sun —just new ways to complicate simple statistics. The crowd is currently shouting "Bearish," pointing to the obvious trend. But we deal in probabilities, not certainties.
Copying a trade is akin to gambling; you borrow the entry but you cannot borrow the conviction. When the heat is on, only your own thesis will keep you steady. You must train yourself to follow your plan flawlessly rather than waiting for a conductor to wave a baton. Today, I am looking at a contrarian setups on Cocoa—a bullish reversal in a sea of red, based on market inefficiency.
The Technical Landscape: The Bearish Context
Let us acknowledge the reality before we dream of the reversal. As the analysis shows:
The Daily and 4H trends are undeniably bearish, adhering to a descending channel. Price has broken the shelf at 5,500 , flipping it into a formidable resistance.
Volume profiles show heavy overhead supply.
Most would stop here. But context matters. Most breakouts fail, and most trends eventually exhaust. We are approaching the psychological support of 5,000 , a level where the "bears have fattened up for winter" and may soon look to hibernate (take profits).
The Setup: The Gap Fill Thesis
My eyes are fixed on the Market Inefficiency —the massive UNFILLED GAP hovering above. The market abhors a vacuum; price seeks liquidity like water seeks a valley.
The Bullish Thesis: We are looking for a failure of the current bearish momentum to translate into a mean-reversion trade.
The Trigger: We need to see price reclaim and close above the 6,000 level on the 4H chart. This invalidates the immediate bearish breakdown.
The Target: Once the reversal is confirmed, the magnet is the liquidity void (Gap Fill) aimed toward 7,200 .
The Risk: Until 6,000 is reclaimed, this is catching a falling knife. If 5,600 gives way, the thesis is invalid, and we step aside.
Remember, I share this not so you can mimic my steps, but so you can find your own rhythm within the music.
Disclaimer: This is not financial advice. It is for educational and informational purposes only. Please conduct your own research and manage your risk accordingly.
