Cotton Futures–-Cotton futures in the May contract is slightly higher this Tuesday afternoon in New York up 15 points at 80.64 bucking the trend as most commodities were sharply lower today as the U.S dollar continues it’s bullish momentum as prices are right near a 6 month high putting pressure on most sectors. Cotton prices are still trading under their 20 and 100 day moving average as this trend remains to the downside as this recommendation was a counter-trend trade which I don’t do very often, but I think a special situation could be at hand.
I have been recommending a bullish position from the 79.00 level and if you took that trade continue to place the stop loss below the September 29th low of 66.28 as an exit strategy as this is a high risk trade as the volatility remains incredibly high as that situation is not going to change anytime soon especially as we enter the summer season.
At the current time I also have bullish recommendations in coffee and orange juice as coffee prices were sharply lower today as that commodity is unable the gain any footing in the short-term, however I do believe cotton prices look cheap as we have experienced a significant decline in price over the last month so stay long as I still believe the risk / reward is in your favor to the upside.
In next week’s trade I will raise the stop-loss therefor the monetary risk will also be reduced as a possible spike bottom may have occurred last week.
CHART STRUCTURE: POOR
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