Cotton Futures—Cotton futures in the July contract is currently trading at 75.80 after settling last Friday in New York at 77.70 down almost 200 points for the trading week as a rounding top chart pattern looks to have been formed in my opinion. I have been recommending a bearish position from around the 75.78 level and if you took that trade continue to place the stop loss at 79.57 as an exit strategy, however the chart structure will improve in next week’s trade therefor the monetary risk will also be lowered.
Cotton prices are trading under their 20 and 100 day moving average as the trend has turned to the downside with the next major level of resistance at the 74.00 level & if that is broken I think we could test the contract low which was hit on February 12th at 72.33 as the agricultural markets still remain bearish.
Spring planting is in full swing in the southern part of the United States as we have no complications yet, but it’s a long growing season as the trend is your friend & this trend and the risk/reward are in your favor to take a short position.
I will be looking at adding more contracts to the downside possibly in next week’s trade as we await the next crop report which will be released in early May and certainly will send volatility back into this market.
TREND: LOWER
CHART STRUCTURE: EXCELLENT
VOLATILITY: LOW
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