Will Cotton Prices Drop In The World Market?
IFC Markets | May 08, 2017 10:06AM ET
China sells reserves
China sells cotton from state reserves in the domestic market. Will the cotton prices drop in the world market?
On Monday, May 8, 2017, China sold at the auction 19. 9 thousand tonnes of cotton from state reserves in the domestic market. Theoretically, this may partially reduce the volume of imports. Previously, in Q1 2017, China imported 370 thousand tonnes of cotton, which is by 68% more than the same period of the last year. Note that auctions have been recently held regularly in China. Thus, on May 5, 21.3 thousand tonnes of cotton were sold.
On the daily time frame, the Cotton: D1 ended the uptrend and is correcting down. A further price decline is possible in case of a decrease in demand in China and deterioration of weather conditions if the El Niño cyclone develops.
- The Parabolic indicator gives a bearish signal.
- The Bollinger bands indicate normal volatility. They are titled downwards.
- The RSI indicator is below 50. No divergence.
- The MACD indicator gives bearish signals.
The bearish momentum may develop in case Cotton falls below the Bollinger bands® at 75,9. This level may serve as an entry point. The initial stop-loss may be placed above the two last fractal highs and the maximum since June 2014 at 79,5. After opening the pending order, we shall move the stop to the next fractal high following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop-loss moving it in the direction of the trade. If the price meets the stop level at 79,5 without reaching the order at 75,9, we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis:
Position: Sell
Sell stop: below 75,9
Stop loss: above 79,5
Get The News You Want
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.