News of record spec net-long positions and open interest levels not seen since 2008 continue to dominate the headlines as March cotton futures posted their highest close in over a year. On Tuesday, February 1st, traders saw an upside breakout from the most recent near-term consolidation range, once again reiterating the positive tone in cotton. Technically, the market appears incredibly strong with Wednesday’s relative highs coming on strong volume. The RSI indicator has continued to oscillate between the 80-40 range, which can be used as OB/OS signals in a bull trending market, again reiterating the positive nature of cotton. Our exports here in the US continue to be strong with the most recent sales coming in at 328,700 running bales.
So long as cotton demand continues to be healthy, strength in cotton futures prices appear poised for further strength as we head into the month of February. The positive structure of this market remains valid above the recent swing low (71.71) and both the short and intermediate term trends remain positive. The August 5th blow-off top registered a 78.00 high trade and cotton prices appear poised to retest this prior swing high from several months back.
Mar ’17 Cotton Daily Chart
Source: RJO Futures Pro
Series 3 Licensed, CMT
Market Strategist II
Erik attended the University of Illinois in Champaign where he majored in Communication with a concentration in Economics. As a member of the Market Technicians Association, he has distinguished himself as a professional in the field of technical analysis and currently holds the Chartered Market Technician (CMT) designation.
Erik began working as a Technical Analyst at JS Services Research and Trading LLC, where he analyzed futures contracts providing traders with key technical levels and trading strategies. While there, he also created a 4-week Technical Analysis educational course geared toward teaching traders how to utilize Technical Analysis in their trading strategies.