Technical Analysis #C-COTTON : 2018-10-15

The hurricane can damage crops

The hurricane Michael can damage US crops. Will the cotton price continue rising?

The U.S. Department of Agriculture (USDA) in its weekly report showed that export sales were up on 208,400 running bales. The U.S. National Hurricane Center (NHC) said that hurricane Michael was a Category 4 storm on the five-step Saffir-Simpson hurricane scale. The Michael will could be a one of the most powerful hurricanes in U.S. history.

On the daily timeframe,Cotton: D1 broke up the resistance line of the falling trend. The further price growth is possible in case of worsening weather conditions and reduction of a world harvest.

• The Parabolic indicator gives a bullish signal.

• The Bollinger bands have narrowed, which indicates low volatility. The lower band is titled upward.

• The RSI indicator is above 50. It has formed a positive divergence.

• The MACD indicator gives a bullish signal.

The bullish momentum may develop in case Cotton exceeds the last fractal highs: 80. This level may serve as an entry point. The initial stop loss may be placed below the 2 last fractal lows, the low since December 2017 and the Parabolic signal at 76. After opening the pending order, we shall move the stop to the next fractal low following the Bollinger and Parabolic signals. Thus, we are changing the potential profit/loss to the breakeven point. More risk-averse traders may switch to the 4-hour chart after the trade and place there a stop loss moving it in the direction of the trade. If the price meets the stop level (76) without reaching the order (80), we recommend to close the position: the market sustains internal changes that were not taken into account.

Summary of technical analysis

Position	Buy
Buy stop	Above 80
Stop loss	Below 76

 

 

 

 

 

 

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