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New York cotton futures ended easier on Friday still dominated by switch trade. The focus will now turn to how much China, the world's top consumer of cotton, will buy from the international market.

The active December contract continues to consolidate in a broad range presently with a bearish bias. The March contract is showing signs of turning higher. However, there are still no clear signals to that effect. Next important support is at 50.15 cents levels. Failure to hold support here can take prices further lower to the next important support at 48.75 cents.

The underlying trend still remained bearish. Only a move above 54.20 cents will confirm a bullish reversal. The potential target for the downside is at 46.10 cents in the near-term. Elliot wave analysis stills points to a corrective pattern in progress. A daily close below 48 cents will confirm the corrective pattern we have been tracking and will need to review the counts.

RSI is in the neutral zone indicating that it is neither overbought nor oversold. The averages, in MACD are below the zero line in the indicator suggesting bearishness. Only a crossover of the averages above the zero line again will indicate a bullish reversal.

Current prices are below the short-term average of 8-day EMA at 52.10 cents indicating bearishness and the 34-day EMA is at 53.18 cents. Therefore, look for cotton futures to test the support levels.

Supports are at 50.15, 49.60 and 48.75c Resistances are at 52.10, 53.00 and 54.81 cents respectively.

(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.)

Gnanasekar. T

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