Cotton Technicals: 2017-12-15
IFC Markets | Dec 15, 2017 07:26AM ET
Cotton Prices Rise On US Stock Forecast Cut
Cotton prices advance as US cotton stock forecast was lowered. Will cotton continue rising?
In the December 11 World Agricultural Supply and Demand Estimates report, the US Department of Agriculture revised downward the 2017-18 US cotton stocks by 300 thousand bales (480-pound each) to 5.80 million bales. At the same time, declining US yields as harvest continues point to possible US crop downgrade. Lower US stocks and expected lower crop are bullish for cotton prices.
On the daily timeframe, the Cotton: D1 has been retracing following the decline after hitting a six-month high in the beginning of September. A bullish Golden Cross chart pattern with 50-day moving average MA(50) crossing above the 200-day moving average MA(200) price from below has formed.
- The Parabolic indicator has formed a buy signal.
- The Donchian channel indicates an uptrend: it is tilted upward.
- The MACD indicator gives a bullish signal.
- The Stochastic oscillator is in the overbought zone, which is a bearish signal.
We expect the bullish momentum will continue after the price breaches above the upper Donchian bound at 75.48. This level can be used as an entry point for a pending order to buy. The stop loss can be placed below the lower Donchian bound at 70.94. After placing the pending order, the stop loss is to be moved to the next fractal low, following Parabolic signals. By doing so, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (70.94) without reaching the order (75.48), we recommend canceling the position: the market sustains internal changes which were not taken into account.
Technical Analysis Summary
Position - Buy
Buy stop - Above 75.48
Stop loss - Below 70.94
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.