China just cut rates. Equities have been rallying. I think commodities will take a bullish turn soon, as specualtion may start China commodity buying will pick up. Also the cash liquidity is huge on mkts and HFs may turn to commodities again as a bullish trade alternative. If this will be a driver, then Oil, Copper, Iron Ore and Cotton may start some bullish price action soon. Agricultural products are bit different case, but those are already bullish trending on daily chart, despite talking heads are warning how record high harvest the US has.
(please see my analyses publised today on corn, wheat, soybeans and Oil today.)
So what about Cotton?
Basically it is still bearish trending. Last time I was looking for a possible long entry was when it traded ard 63. I was waiting for a bullish Kumo breakout, but that did not hapen and Price turned down again. However the trend momentum is not strong, ADX is below 20 and DMI lines were not able to widen significantly. As time goes by it seems Cotton is building some form of bullish wedge, while there is still chance for a double positive MACD divergence to develop. These are the reasons I started to focus on Cotton again.
On this chart I placed the March/2015 contract, but if you replace it with "CT2!" (second continous contract) and you zoom it out on a weekly or monthly chart, you can see ard 59 there is a very interesting long term key suppor/resistance level.
Regarding positionning, I can assure you, Cotton is one of the biggest short among mkt players. During last 10 days Price dip the turnover was continously decreasing. First of all it would be important to see a pickup in turnover on green bullish candle days. That could be an early signal for short covering.
All in all I think if the bearish momentum can not re-accelerate here, this 58-59 key level will hold, and finally Price will move up again (what can not go lower, will go up). Bullish trend reversal of course can take place only if it trades back above 62, breaks the trendline (the wedge) and later the Kumo as well. Whenever that happens, given the short positioning the bullish move will be very agressive and sharp.
(please see my analyses publised today on corn, wheat, soybeans and Oil today.)
So what about Cotton?
Basically it is still bearish trending. Last time I was looking for a possible long entry was when it traded ard 63. I was waiting for a bullish Kumo breakout, but that did not hapen and Price turned down again. However the trend momentum is not strong, ADX is below 20 and DMI lines were not able to widen significantly. As time goes by it seems Cotton is building some form of bullish wedge, while there is still chance for a double positive MACD divergence to develop. These are the reasons I started to focus on Cotton again.
On this chart I placed the March/2015 contract, but if you replace it with "CT2!" (second continous contract) and you zoom it out on a weekly or monthly chart, you can see ard 59 there is a very interesting long term key suppor/resistance level.
Regarding positionning, I can assure you, Cotton is one of the biggest short among mkt players. During last 10 days Price dip the turnover was continously decreasing. First of all it would be important to see a pickup in turnover on green bullish candle days. That could be an early signal for short covering.
All in all I think if the bearish momentum can not re-accelerate here, this 58-59 key level will hold, and finally Price will move up again (what can not go lower, will go up). Bullish trend reversal of course can take place only if it trades back above 62, breaks the trendline (the wedge) and later the Kumo as well. Whenever that happens, given the short positioning the bullish move will be very agressive and sharp.
