Can Cotton Continue to Rally?

February 2, 2017 2:00PM CST

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 5thblow-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

Cotton Daily Chart


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