Cotton Futures—Cotton futures in the July contract are trading lower for the 5th consecutive session down another 85 points at 75.85 as I have been recommending a bearish position around the 75.78 level and if you took that trade continue to place the stop loss at 79.57 as an exit strategy.
The agricultural markets especially the soft commodity sector continue to be bearish as I’m also recommending a short position in sugar as the Brazilian Real continues to remain weak against the U.S dollar as that is a negative influence on prices.
Cotton is trading below it’s 20 on 100 day moving average as the trend is to the downside as the volatility is starting to pick up as planting is in full swing in the southern part of the United States as the weather will be the main dictator of where prices go over the next several months.
If you take a look at the daily chart I believe a rounding top chart pattern has formed as that is a bearish technical indicator and one of the main reasons why I am recommending a short position at this time. The next major level of support is around the 75.00 area and if that is broken I think we could test the contract low which was hit on February 12th around the 72.50 level as there is room to run to the downside in my opinion.
CHART STRUCTURE: SOLID
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