Cotton technical analysis: Will the cotton quotes rise?

Dmitry Lukashov IFC Markets

Recommendation for Cotton: Buy

Buy Stop: Above 84.

Stop Loss: Below 76.5.

RSI: Neutral.

MACD: Neutral.

MA(200) : Neutral.

Fractals: Buy.

Parabolic SAR: Buy.

Bollinger Bands: Sell.

Chart analysis

On the daily timeframe, Cotton: D1 went up from the downtrend. A number of technical analysis indicators formed signals for further growth. We do not rule out a bullish movement if Cotton rises above the last high: 84. This level can be used as an entry point. We can place a stop loss below the Parabolic signal, the last lower fractal and the 200-day moving average line: 76.5. After opening a pending order, we can move the stop loss to the next fractal low following the Bollinger and Parabolic signals. Thus, we change the potential profit/loss ratio in our favor. After the transaction, the most risk-averse traders can switch to the four-hour chart and set a stop-loss, moving it in the direction of the trend. If the price meets the stop loss (76.5) without activating the order (84), it is recommended to delete the order: the market sustains internal changes that were have not been taken into account.

Fundamental Analysis

The United States Department of Agriculture (USDA) has revised the projections of the global and American cotton crop. Will the Cotton quotes rise? The USDA in its April review reduced its world cotton production forecast and increased its consumption forecast. As a result, the global cotton stocks are expected to decrease to 93.46 million bales, by 5 million bales (480 pounds each) compared to the 2019/2020 season. According to the USDA, the United States will maintain its export volume, which will lead to a drop in US stocks by 3.3 million bales (almost 2 times) this season - to 3.9 million bales. The USDA also reported a reduction in crop areas harvested within the United States by a quarter in the 2020/2021 season (8.7 million acres) compared to the 2019/2020 season (11.6 million acres).

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Author

Dmitry Lukashov

IFC Markets

Dimtry Lukashov is the senior analyst of IFC Markets. He started his professional career in the financial market as a trader interested in stocks and obligations.

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