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This morning’s break below 04-Jun’s 59.02 low in the now-prompt Dec contract and our short-term risk parameter confirms a bearish divergence in short-term momentum. This mo failure defines Mon’s 61.14 high as the end of the uptrend from 29-May’s 56.43 next larger-degree corrective low and our new short-term risk parameter from which shorter-term traders with tighter risk profiles can objectively based non-bullish decisions like long-covers.
![](https://rjofutures.rjobrien.com/images/2020/06/cotton-dec20-240min-chart.gif)
Against the backdrop of the past couple MONTHS’ broader base/correction/reversal however shown in the daily chart below, this momentum failure is of too small a scale to conclude anything more than another interim correction within the broader bull similar to late-May’s 3-wave correction from 59.59 to 56.43 labeled in the 240-min chart above. Indeed, this week’s sell-off attempt has thus far only unfolded into a 3-wave thus a potentially corrective structure that has stalled at the exact (58.74) 50% retrace of late-May/early-Jun’s 56.43 – 61.14 rally. Smaller-degree strength above yesterday’s 60.37 minor corrective high will render this week’s slip a 3-wave and thus corrective event and re-expose the major recovery to new highs above 61.14.
IF this week’s slip is the start of an alternate broader peak/reversal count, minimally, it needs to resume trendy, impulsive behavior below today’s 58.75 low AND eventually break 29-May’s 56.43 larger-degree corrective low and key risk parameter. Until such weakness is shown, longer-term players are advised to maintain a bullish policy and first approach this setback attempt as another corrective buying opportunity.
![](https://rjofutures.rjobrien.com/images/2020/06/cotton-dec20-daily-chart.gif)
![](https://rjofutures.rjobrien.com/images/2020/06/cotton-dec20-weekly-chart.gif)
Finally, the weekly log chart of the Dec contract shows the market engaging key former support from Sep’19 around the lower-61-handle that cannot be ignored as a new resistance candidate, especially in light of this week’s minor momentum failure. By the same token however, the market’s gross failure to sustain losses below FOUR YEARS of 54.50-to-56.50-area support on a monthly log active-continuation basis below is hard to consider as anything other than the bear’s total failure to perform and a developing bullish factor that could be major in scope, especially given the historic extent to which market sentiment/contrary opinion indicators collapsed.
In sum, a bullish policy remains advised for long-term players with a failure below 56.43 still required to negate this call and warrant its cover. Shorter-term traders have been advised to neutralize bullish exposure and are further advised to maintain a neutral/sideline position for the time being. We believe it’s as likely as not that this week’s setback is just another correction and that the next punt for shorter-term traders will again be from the bull side, but the market hasn’t yet arrested this intermediate-term slide with a countering bullish divergence in mo. A recovery above 60.37 would tilt the shorter-term directional scales back to the bull side.
![](https://rjofutures.rjobrien.com/images/2020/06/cotton-monthly-chart.gif)