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Cotton Technical Analysis - Cotton Trading: 2017-08-30
Hurricane Harvey may damage the US cotton crops
Hurricane Harvey damaged the cotton crops in the US state of Texas. Will the cotton prices grow?
The largest cotton plantations in the US are situated in Texas. It is assumed that Hurricane Harvey and the subsequent flooding destroyed 400-500 thousand bales of cotton (217 kg in the 1st bale). South Texas Cotton and Grain Association estimated the initial damage of $150 mln, but the data will be updated.
On the daily timeframe, COTTON: D1 is in the neutral range moving to its upper boundary. The further price increase is possible in case of the marked damage of the US cotton production sector by Hurricane Harvey.
- The Parabolic indicator gives a bullish signal.
- The Bollinger bands narrowed, which means lower volatility. They are tilted upwards.
- The RSI indicator is above 50. No divergence.
- The MACD indicator gives a bullish signal.
The bullish momentum may develop in case COTTON exceeds the last fractal high, the upper boundary of the neutral range and the upper Bollinger band at 71.3. This level may serve as an entry point. The initial stop loss may be placed below the 12-month low and the Parabolic signal at 66. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level at 66 without reaching the order at 71.3 we recommend cancelling the position: the market sustains internal changes that were not taken into account.
Summary of technical analysis
| Position | Buy |
| Buy stop | above 71,3 |
| Stop loss | below 66 |
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