Cotton Bull Reasserts, Identifies New L-T Risk | RJO Futures

May 12, 2017 8:27AM CDT

Following the market's failure yesterday to sustain Wed's losses below our 77.82 short-term risk parameter discussed in yesterday morning's Technical Blog, the 240-min chart below shows that it took little time for the secular bull trend to reassert its dominance.  As a direct result of this resumption of the major uptrend, the market has identified yesterday's 76.17 low as THE new larger-degree corrective low and key long-term risk parameter it is now minimally required to fail below to break the bull and expose a major correction or reversal lower.

Cotton 240 min Chart


Cotton Daily Chart

The trend is clearly up on all scales and should not surprise by its continuance or acceleration with former resistance from the 80.25-to-79.75-range considered new key support.  The rally from 01Sep16's 65.96 low looks to be a textbook 5-wave Elliott sequence with the resumed rally from 10-Apr's 75.35 4th-Wave low and exact 38.2% retrace of Oct-Mar's 68.00 - 80.27 3rd-Wave considered the 5th- and completing-wave to the sequence.  This said however, until and unless the market proves any weakness with a confirmed bearish divergence in momentum needed to stem the clear and present uptrend, there's really no way to forecast the scope of this stage of the bull.

Since the 3rd-Wave "extended" we can "derive" a 5th-Wave 1.000 progression of last Sep's 65.96 - 72.62 1st-Wave at 82.89, but as always such merely derived technical levels are considered useless without an accompanying and confirmed bearish divergence in momentum needed to stem the uptrend.  These issues considered, a bullish policy remains advised for long-term players with a failure below 76.17 required to negate this call.  Shorter-term traders with tighter risk profiles are advised to wait for a bullish divergence in short-term mo following a relapse attempt to 80.25-to-79.75-range support to re-establish bullish exposure.

Cotton Weekly Chart

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