Please check the original idea on the link below. I have changed the futures contract on the chart from the "second continous" to the March/2015 contract, to get more precise technical picture.
In last 2,5 weeks cotton has been trading in a range, but it looks like all dips are bought with increasing turnover. The turnover is probably also increasing as the dec/14 contract maturity is getting closer and players swap positions to the next closest March/2015 futures.
I checked net speculative mkt positionning, and that is extremely short on Cotton, so probably this slow dip buying is already some smart short covering.
Technical details:
- Price is in a bearish trend, but trendline is very close, also Price is about to enter the Cloud
- Especially last three candles suggest the bearish price action could be soon over. We had a higher low three days ago with a close above Kijun Sen. This means some short term bullish bias developing
- DMI-ADX tells us only this mkt is consolidating, not trending. The bearish trend ran out of steam by the end of October.
- All Ichimoku lines are very close to each other and to Price. This is so far a consolidation, but Chikou Span crossed above Price candles, Kijun Sen and Senkou A started to point up (these are signals of slight bullish bias within consolidation)
- MACD has a positive divergence, Slow Stoch again turning up
- The level to be watched: 63,40-63,75! Whenever Price breaks the trend and strikes above Kumo, that can be a start of a bullish trend reversal.
The entry strategy is still the same, trade on the break! Expected Risk/Reward is ard 3,25
When the break hapens, don't hesitate, as this product is really a fast moving one.
In last 2,5 weeks cotton has been trading in a range, but it looks like all dips are bought with increasing turnover. The turnover is probably also increasing as the dec/14 contract maturity is getting closer and players swap positions to the next closest March/2015 futures.
I checked net speculative mkt positionning, and that is extremely short on Cotton, so probably this slow dip buying is already some smart short covering.
Technical details:
- Price is in a bearish trend, but trendline is very close, also Price is about to enter the Cloud
- Especially last three candles suggest the bearish price action could be soon over. We had a higher low three days ago with a close above Kijun Sen. This means some short term bullish bias developing
- DMI-ADX tells us only this mkt is consolidating, not trending. The bearish trend ran out of steam by the end of October.
- All Ichimoku lines are very close to each other and to Price. This is so far a consolidation, but Chikou Span crossed above Price candles, Kijun Sen and Senkou A started to point up (these are signals of slight bullish bias within consolidation)
- MACD has a positive divergence, Slow Stoch again turning up
- The level to be watched: 63,40-63,75! Whenever Price breaks the trend and strikes above Kumo, that can be a start of a bullish trend reversal.
The entry strategy is still the same, trade on the break! Expected Risk/Reward is ard 3,25
When the break hapens, don't hesitate, as this product is really a fast moving one.
