The Hindu Business Line : Cotton futures to move higher

Cotton futures ended firm on Friday, on speculative buying, on the back of a strong grains complex. The market will continue to take its cue from the grains ring, especially since cotton farmers are trying to decide this spring if they will sow cotton or switch to higher-priced soyabeans, wheat or even corn.

A pair of reports will be awaited by the trade next week. The first would be the monthly supply/demand report from the US Agriculture Department due on Friday morning.

The next would be the annual potential US 2008 cotton plantings survey by the industry group National Cotton Council of America, which is supposed to be released later on Friday.

Active March cotton futures contract is finding support in line with our expectations.

No change in view. Corrections should now find good support at 65.75 cents followed by 62.90 cents. As mentioned earlier, the bigger picture now hints at a test of 84 cents in the coming months.

Crucial support is at 65 cents and as long as this level remains undisturbed, we can expect prices to continue rising higher. Our favoured view expects cotton futures to find supports at the above mentioned levels, failing which we could visit the 58-60 cents zone again and then resume the climb higher again.

This zone is also the breakout point which spurred a huge rally in cotton futures in the past three months. Elliot wave counts indicate a third wave impulse in progress. After this correction ends, we can expect the impulse to continue higher.

Indicators are displaying a neutral picture. RSI is in the neutral zone indicating that it is neither overbought nor oversold.

The averages in MACD are still above the zero line of the indicator indicating bullishness to be intact. Therefore, look for cotton futures to rise higher.

Supports are at 66.85, 65 & 62.75 cents and resistances are at 69.22, 71.25 & 73 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

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
Widespread snow, rain as cold wave lifts

AP set on ambitious oil palm project

Tanflora to expand, diversify

Good demand for select CTCs in N. India tea sale

Cotton futures to move higher

Villagers oppose land acquisition for Mangalore SEZ project

Pepper futures recover from last week’s fall

Cardamom prices decline on bearish sentiments

213 entries for screening at UPASI tea competition