While we have not been blessed to date with a decent chunk of historical price data for United Cacao Ltd SEZC LON:CHOC, a burgeoning cocoa shortage story and the lack of any other proxies to this market mean that this stock is very much in focus at the moment. The charting view is dominated not only by the current sharp break to the upside, but also the price action which came before it. This consisted of an extended basing towards the 150p level a process which took the best past of three months to start 2015. What was significant about this action is the way that it was significantly above the initial December support for the stock at 128p.
The United Cacao Ltd SEZC LON:CHOC give-away in terms of the latest spike through 200p was the late March bull flag either side of this number, and effectively a pause at the former December resistance zone. However, the shares only stalled here temporarily and the expectation now is that even though the RSI oscillator is overbought at 80 plus, we should be treated to further upside. This is particularly the case while there is no end of day close back below the 10 day moving average at 206p. As long as this feature is not broken the implied upside here could be as great as the December price channel top of 300p. The time-frame on such a move is seen as being as soon as the next 4-6 weeks. In the meantime any dips towards the 10 day line to cool off the oscillator are regarded as buying opportunities.
