Cotton is one of the soft commodities, along with sugar, coffee, orange juice, and cocoa. In early centuries, Alexander the Great has brought cotton from Pakistan to Europe. Much later and finally, it has obtained dominance in textile manufacturing during the British industrial revolution in the 18th century. It was so critical that at times of Civil War in North America the Confederate bonds sold in Europe were backed by cotton. Today, the largest producers and, at the same time, the largest consumers of cotton are China and India. One can trade Cotton futures at ICE owned New York Board of Trade in contracts of 50’000 pounds each under the ticker CT #F. Also, there are similar contracts at CME-owned NYMEX under the ticker TT #F.
Currently, we see other soft commodities like coffee and sugar turning higher after a long period of depressed prices. Based on the correlation within group of softs, the cotton is expected to turn higher as well. In particular, wave structure of CT #F supports that bullish view. Will the rally in the cotton prices make buying of the new clothes less affordable for the broad population?
Cotton quarterly Elliott Wave analysis 05.08.2021
The quarterly chart below shows the cotton front contract CT #F at NYBOT. Historically, cotton has been traded at New York Cotton Exchange since 1870. Later, it moved to NYBOT and the chart data shows cotton prices from 1972 on. From the lows, the prices have developed a corrective cycle higher in black wave ((w)) of a grand supercycle degree. One can see it as an Elliott Wave zigzag pattern. Hereby, blue wave (a) has demonstrated a leading diagonal structure and has ended in the 3rd quarter of 1980. From there, a running triangle in wave (b) has caught the market in range-bound oscillations until the 4th quarter of 2008. From there, the sideways market has resolved into an acceleration higher within an impulsive move in wave (c). Hereby, cotton has made 6x in price and saw the all-time highs in the 1st quarter of 2011 at 219.70.
From the all-time highs in 2011, a correction lower in wave ((x)) has unfolded as an Elliott Wave double three pattern. In 9 years, CT #F has become cheaper by 78% reaching 48.35 level. It is the preferred view that an important bottom on April 2020 has been set and the correction has ended. From the lows, a new multi-decade cycle within black wave ((y)) may have started.
For 2021-2040, the expectations are to retest if not to break above the all-time highs. The target for wave ((y)) will be 268-404 area. From current levels, the cotton can, therefore, Tripple in price.
Cotton daily Elliott Wave analysis 05.08.2021
The daily chart below shows in more detail the first stages of the new cycle within the grand supercycle in black wave ((w)). From April 2020 lows, a clear impulse in black wave ((1)) has ended. A pullback in wave ((2)) might have ended at 77.12 on March 26th. While above there, wave ((3)) can extend higher. Long-term investors can be looking building up a long position in pullback against 48.35 lows expecting more upside.
FURTHER DISCLOSURES AND DISCLAIMER CONCERNING RISK, RESPONSIBILITY AND LIABILITY Trading in the Foreign Exchange market is a challenging opportunity where above average returns are available for educated and experienced investors who are willing to take above average risk. However, before deciding to participate in Foreign Exchange (FX) trading, you should carefully consider your investment objectives, level of xperience and risk appetite. Do not invest or trade capital you cannot afford to lose. EME PROCESSING AND CONSULTING, LLC, THEIR REPRESENTATIVES, AND ANYONE WORKING FOR OR WITHIN WWW.ELLIOTTWAVE- FORECAST.COM is not responsible for any loss from any form of distributed advice, signal, analysis, or content. Again, we fully DISCLOSE to the Subscriber base that the Service as a whole, the individual Parties, Representatives, or owners shall not be liable to any and all Subscribers for any losses or damages as a result of any action taken by the Subscriber from any trade idea or signal posted on the website(s) distributed through any form of social-media, email, the website, and/or any other electronic, written, verbal, or future form of communication . All analysis, trading signals, trading recommendations, all charts, communicated interpretations of the wave counts, and all content from any media form produced by www.Elliottwave-forecast.com and/or the Representatives are solely the opinions and best efforts of the respective author(s). In general Forex instruments are highly leveraged, and traders can lose some or all of their initial margin funds. All content provided by www.Elliottwave-forecast.com is expressed in good faith and is intended to help Subscribers succeed in the marketplace, but it is never guaranteed. There is no “holy grail” to trading or forecasting the market and we are wrong sometimes like everyone else. Please understand and accept the risk involved when making any trading and/or investment decision. UNDERSTAND that all the content we provide is protected through copyright of EME PROCESSING AND CONSULTING, LLC. It is illegal to disseminate in any form of communication any part or all of our proprietary information without specific authorization. UNDERSTAND that you also agree to not allow persons that are not PAID SUBSCRIBERS to view any of the content not released publicly. IF YOU ARE FOUND TO BE IN VIOLATION OF THESE RESTRICTIONS you or your firm (as the Subscriber) will be charged fully with no discount for one year subscription to our Premium Plus Plan at $1,799.88 for EACH person or firm who received any of our content illegally through the respected intermediary’s (Subscriber in violation of terms) channel(s) of communication.
Recommended Content
Editors’ Picks
EUR/USD trades weak below 1.0800 amid Good Friday lull, ahead of US PCE
EUR/USD remains depressed below 1.0800 after soft French inflation data, amid minimal volatility and thin liquidity on Good Friday. The pair keenly awaits the US PCE inflation data and Fed Chair Powell's speech for fresh hints on next week's price action.
GBP/USD holds steady above 1.2600 as markets stay calm on Good Friday
GBP/USD trades sideways above 1.2600 amid a typical Good Friday trading lull. A broadly firmer US Dollar could keep any upside attempts limited in the pair ahead of the US PCE inflation data and Fed Chair Powell's appearance.
Gold price sits at all-time highs above $2,230, US PCE eyed
Gold price hit all-time highs at $2,236 on Thursday to finish Q1 2024 with a bang. Most major world markets, including the US are closed due to Holy Friday, leaving volatility around Gold price highly subdued. US PCE inflation and Powell are awaited.
Jito price could hit $6 as JTO coils up inside this bullish pattern
Jito (JTO) price has been on an uptrend since forming a local bottom in early January. Since then, JTO has revisited the key swing point formed in early December, suggesting the bulls’ intention to move higher.
Key events in developed markets next week
Next week, the main focus will be inflation and the labour market in the Eurozone. We expect services inflation to be impacted by the easter effect, while the unemployment rate to be unchanged.