Financial Daily from THE HINDU group of publications
Monday, Nov 25, 2002
Financial Daily from THE HINDU group of publications Monday, Nov 25, 2002 |
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Agri-Biz & Commodities
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Cotton Columns - Technical Analysis Cotton prices may head lower again Gnanasekar T.
NYCE cotton futures prices finished higher on Friday as last-minute rollovers into the March contract lifted prices in light volume, despite bearish weather for crops in the Delta and West Texas. The CFTC reported the Commitment of Traders data for the week ended last Tuesday, showed funds were net long cotton futures by 22,402 lots, up from 20,157 in the previous week. Looking at the weekly USDA export sales report released on Thursday, the USDA said net upland cotton sales were at 157,600 running bales (RBs, 500 lbs), against sales in last week's report of 153,900 RBs. In its monthly production report for November, USDA lowered its estimate of the US 2002-03 (July-August) cotton exports to 10.8 million (480-lb) bales. Prices may find it difficult to go higher, because of harvest pressure, sagging the US exports, burdensome stocks and an already soft US cotton mill consumption rate. The active December contract corrected again and failure to follow through above 50 cents is worrying now. The important resistance level at 50.10 cents needs to be decisively broken to provide strength to the bullish move from here. A double top pattern is noticed now and there is potential for prices to correct lower to 46 cents on the down side. We are in the end of the `B' wave a corrective pattern and the `C' wave has started with a wave equality target, of 55 cents in the medium term. RSI is in the neutral zone. This leaves scope for prices to head lower again till it gets oversold again. The averages in MACD, are comfortably above the zero line in the indicator. As long as it stays above the zero line prices will continue their bullish streak. Current prices are below the short-term average of 9 day EMA showing weakness in the short term and the medium term average 50 day EMA is at 46.21 cents. Look for prices to test the support levels. Resistances at 48.30, 49.20 and 50.10 cents. Supports at 47.15, 46.35 and 45.60 cents.
(The author is a trader with Scotiabank and the views expressed by him are his own and not necessarily that of his employer. This analysis is based on the historical prices movements and there is risk of loss in trading.)
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