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The cotton continuous futures contract on the Multi Commodity Exchange of India (MCX) hit a high of ₹25,080 per bale on Wednesday and witnessed selling pressure at higher levels. But, the commodity took support at around ₹24,500 and bounced up climbing 0.45 per cent to trade at ₹24,760 levels on Thursday.
In early May 2020, the contract found support at around ₹15,000 and bottomed out. Since then, the contract has been in a long-term uptrend. Medium as well as the short-term trends are also up for the contract. However, the contract met with a vital resistance at ₹22,300 in this March and fell sharply to record a low at ₹20,150 in late March.
Subsequently, the contract resumed the uptrend and has been in a medium-term uptrend since then. It breached a key resistance at ₹22,300 in late May and continued to trend northwards. Short-term trend is also up. The contract trades well above the 21- and 50-day moving averages.
Immediate support
As long as the contract trades above the immediate support level of ₹23,500 the short-term uptrend stays positive. On the upside, a strong rally above the immediate resistance level of ₹25,000 can accelerate the contract and take it higher to ₹25,500 and then to ₹26,000 levels. Both the daily and the weekly relative strength indices are hovering in the bullish zone backing the uptrend.
Conversely, if the contract falls below the immediate support level of ₹23,500 levels will bring back selling pressure and pull the contract down to ₹23,000 and then to ₹22,250 levels.
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