fxs_header_sponsor_anchor

Analysis

Technical Analysis #C-COTTON : 2018-07-02

Estimates of higher supply bearish for cotton prices

USDA estimates increasing cotton planting in 2018/19. Will the cotton price continue declining?

The International Cotton Advisory Committee estimates that high 2017/18 season cotton prices are expected to result in moderate growth in global planting for 2018/19, which starts in August. The planted cotton area in US is expected to increase due to new support policies for the crop, expanding by 11% to 5.08m hectares in 2018/19. Cotton price is supported by strong Chinese demand for the crop, and China has decided to extend its reserve auction to sell cotton stocks by one month through September. And the US Department of Agriculture current forecast suggest that ending stocks outside of China will increase in 2018/19, which will help offset rising Chinese demand. Forecasts of increasing cotton planting area are bearish for cotton prices.

On the daily timeframe the COTTON: D1 is below the 50-day moving average MA(50) which is falling, this is bearish.

  • The Parabolic indicator gives a sell signal.

  • The Donchian channel indicates downtrend: it is tilted lower.

  • The MACD indicator gives a bearish signal: it is below the signal line and the gap is narrowing.

  • The Stochastic oscillator failed to breached into the oversold zone, it is rising but has not reached the overbought zone.

We believe the bearish momentum will continue after the price breaches below the lower boundary of Donchian channel at 83.01 This level can be used as an entry point for placing a pending order to sell. The stop loss can be placed above the upper Donchian boundary at 88.13. After placing the order, the stop loss is to be moved every day to the next fractal high, following Parabolic signals. Thus, we are changing the probable profit/loss ratio to the breakeven point. If the price meets the stop loss level (83.01) without reaching the order (88.13), we recommend cancelling the order: the market has undergone internal changes which were not taken into account.

Technical Analysis Summary

Position

Sell

Sell stop

Below 83.01

Stop loss

 Above 88.13

 


 

 

 

Want to get more free analytics? Open Demo Account now to get daily news and analytical materials.

Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.


RELATED CONTENT

Loading ...



Copyright © 2024 FOREXSTREET S.L., All rights reserved.