Cotton Pullback Risk Has Improved
03 September 2009
DAILY CHART – DEC-09:
In the Commodity Trading Guide we took as our initial bear signal a close below the 57.99 27-Jul low.
Cotton prices recently recovered almost 50% of their 2008 losses, with price action becoming choppier on the approach to this level. Signs of bull fatigue have started to show, but we must wait for more confirmation before becoming outright bears.
WEEKLY CHART - CONTINUATION:
Reviewing the price action on the Weekly chart we could say that a wedge-type pattern had been forming on the approach to the 63.10/64.04 key resistance area (Jun-08 low and 50%).
Sometimes breakouts from these patterns (and triangles too) prove deceptive (i.e. is the recent bear break valid or is the wedge still forming?).
For now, we assume an initial bear break, with tough resistance, in any case, remaining overhead.
In the Commodity Trading Guide we took as our initial bear signal a close below the 57.99 27-Jul low.
But a further breach of the bear channel base projection around 56.00 is needed for bear confirmation.
At this stage there is a good chance that s/term rallies are corrective/temporary only, ahead of a further bear push.
Currently note resistance offered by the old rising support/return line (underside of wedge) at 61.50 just now, ahead of the 63.50 76.4% rebound area.
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