Business Daily from THE HINDU group of publications
Monday, Oct 08, 2007
ePaper
Business Daily from THE HINDU group of publications Monday, Oct 08, 2007 ePaper |
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Agri-Biz & Commodities
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Technical Analysis Cotton futures may test support 
NY cotton futures ended lower on speculative selling on Friday in line with the grains complex, which it has been following closely off late. Fresh fundamental news was lacking this week as China’s markets were on holiday. Weather conditions in the growing regions are expected to aid in the development of the crop adding to the bearishness. Meanwhile, private analytical firm Informa Economics on Friday projected US 2007-08 cotton production at 17.887 million bales, which is higher than the US Department of Agriculture’s 17.81 million-bale September estimate. The active contract is moving in line with our expectations. Important support is now at 62.50c. As long as 60.75c holds any attempts to fall lower, we believe the underlying medium-term trend looks strong and set to test 70c at least or even higher. Crucial support is now at 59.50 cents and as long this level holds, we will stick to our bullish view for cotton futures in the months to come. As we have been maintaining, a re test of 70c seen in 2004 is on the cards. The bigger picture looks bullish and is set to scale new peaks after prices broke above the 60c range convincingly. RSI is in the neutral zone now indicating that it is neither overbought nor oversold. The averages, in MACD are above the zero line indicating bullishness now. Only a cross-over of the averages below the zero line again. Therefore, look for cotton futures to test the support levels. Supports are at 62.50, 60.75 and 59.50c Resistances are at 64.20, 65.95 and 66.75 cents respectively. Gnanasekar T. (The author is the Director of Commtrendz Research and also in the advisory panel of Multi Commodity Exchange of India Ltd (MCX). The views expressed in this column are his own and not that of MCX. This analysis is based on the historical price movements and there is risk of loss in trading. He can be reached at gnanasekar_thiagarajan@yahoo.com.) More Stories on : Technical Analysis | Cotton
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