The Bears Are in Control of Cotton. How Much Lower Will Prices Go?

March cotton (CTH26) futures present a selling opportunity on more price weakness.

See on the daily bar chart for March cotton futures that prices have been trending lower for months, recently hit a contract low, and the bears have the firm near-term technical advantage.

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Fundamentally, China, a major cotton importer, has been shunning the U.S. fiber for months. Also, global consumer demand trends for apparel are shifting, with synthetic fibers becoming more popular as well as being less expensive than U.S. cotton.

A move in March cotton futures below chart support at 64.00 cents would give the bears fresh power and it would also become a selling opportunity. The downside price objective would be 60.00 cents, or below. Technical resistance, for which to place a protective buy stop just above, is located at 66.00 cents.

IMPORTANT NOTE: I am not a futures broker and do not manage any trading accounts other than my own personal account. It is my goal to point out to you potential trading opportunities. However, it is up to you to: (1) decide when and if you want to initiate any trades and (2) determine the size of any trades you may initiate. Any trades I discuss are hypothetical in nature.

Here is what the Commodity Futures Trading Commission (CFTC) has said about futures trading (and I agree 100%):

Trading commodity futures and options is not for everyone. IT IS A VOLATILE, COMPLEX AND RISKY BUSINESS. Before you invest any money in futures or options contracts, you should consider your financial experience, goals and financial resources, and know how much you can afford to lose above and beyond your initial payment to a broker. You should understand commodity futures and options contracts and your obligations in entering into those contracts. You should understand your exposure to risk and other aspects of trading by thoroughly reviewing the risk disclosure documents your broker is required to give you.

On the date of publication, Jim Wyckoff did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. This article was originally published on Barchart.com