Cotton is a beast. Once it starts to move it can be very agressive. And now it is way too quiet. Someone will wake up the beast, then we will see how it looks like and how it behaves... maybe it will become Minotaurus.
Weekly: In terms of Ichimoku it still trades bearish, but lines are flattening out. There is some small positive divergnece in Slow Stoch, which is very rare. (Price reaching lower low, while the indicator can not get so much into oversold zone). Slow Stoch is ebout to give a buy signal. MACD turning bullish again, with such a massive long term positive divergence which finally should raise Bulls' power again. The short term trendline looks to be in danger (we need to see a green candle making sure the break is valid) 3 of 3! Does it ring the bell?
My slogen for today is "Expect the unexpected" and stay with the trends as long as they last. Cotton is maybe the best example for this. Look at the action in 2010-2011! From 70 levels above 200 in two waves. Once you catch a move like this with some leverage, you get into the Hall of Fames. Since the collapse from the tops, from 2012 Cotton has been trading in a wide range between 65-95, and even lower in H2 2014. But still if you roll back the chart, you can realise that in a really long time Price is still within a very interesting support/resistance zone between 58-68. This should hold, especially that more indicators point towards some bullish price action.
Daily: Very quiet sideaway consolidation, ADX is super low, with no DMI trend signal. However we have multiple signals possibly suggesting a buy soon. MACD positive divergence, while MACD itself is bullish now. Price is trading in a very thin range 61,50-63,00. A break on the topside would mean a break of bearish trendline too and also a Price/Kijun Sen cross, followed by a weak bullish Chikou Span cross above Price candles. In fact the Kumo is very thin, so it would be extremely easy to push price back above it and start a sustainable bullish trend.
Strategy: I will set up breakout strategy in two steps. A) Buy on the break of the tight range: Stop Buy at 63,10 with Stop Loss below 61,00 B) Increase position on Kumo breakout: Stop Buy in 65,25-65,50 range with Stop Loss below 62,00 (same time trailing stop up for position "A") Initial bullish target: 76,50 - 77,50 (weekly Kijun or Kumo retest)
Comments
Kumowizard
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Still sideaway, but turnover on bullish days is increasing, and last two days hammer candles are promising. I will soon update this chart with replacing CT2! continous contract with the actual CTH2015 in which I have the long position. Bit different Ichimoku setup (due to lack of gap from contract changes on continous)
Kumowizard
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Long Position 'A' is triggered. In the game now.
LudmilaHanania
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Are you long futures and which month?
Kumowizard
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Yes, I always trade the futures mkt (not CFD or ETF). Most of the times I take positions on the closest maturity contract (front month), unless the expiry date is too close in time, or if I see some better spread pickup or rolldown on the next maturity futures contract, which can be in my favour.
Normally on any kind of futures always the front contract is the most active.
In case of cotton I opened March/2015 longs. FYI also on the chart I published it is the price of the "second" active (March/2015) contract.