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Nadeem Walayat Financial Markets Analysiis and Trend Forecasts

Cotton Commodity Bulls Waver At 61.8% Recovery Level

Commodities / Commodities Trading Nov 23, 2009 - 08:21 AM GMT

By: Seven_Days_Ahead

Commodities

Best Financial Markets Analysis ArticleThe recovery in Cotton from its Nov-08 low slowed during the summer, at one stage suggesting a reversal was in the offing. However, an Oct break to the upside kept bulls on track for the next upside target around a 61.8% recovery level – and now there are indications that a temporary pullback is due.


The Commodity Specialist view

WEEKLY CHART - CONTINUATION:

Former clear resistance from the Jun-08 low (which coincided nicely with the 50% retracement) was finally broken in Oct this year.

The 61.8% level just above 70.00 has now been tested.

Note the recent ‘doji’ week on this candle chart, with open and close near the same level suggesting a moment of indecision.

Is a temporary pullback phase now on the cards?

 

DAILY CHART – DEC-09:

Before we turn to the new front month of Mar-10 note resistance from the channel top on the Dec chart (not evident on the new chart) – coinciding with the occurrence of a Key Reversal Day.

DAILY CHART – MAR-10:

Note the 11-Nov bearish Key Reversal Day, which combines with that ‘doji’ week on the Weekly chart and test of 61.8%.

A pullback would not surprise at this stage.

Initial supports include the 68.40 23.6% pullback, then 67.88/ 67.28 prior highs. Lower support comes from the rising support line and 38.2% level at 64.76.

The current pullback scenario would be invalidated on a close above the 74.27 high.

In the Commodity Specialist Guide we have already suggested aggressive shorts in the 72.50/73.00 area. Initial stops are favoured at 74.75 (catering for a small overshoot), with partial profits targeted around 69.00. With stops then lowered to cost the balance may try and close at/above 65.00.

Mark Sturdy
Philip Allwright

Seven Days Ahead
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© 2009 Copyright Seven Days Ahead - All Rights Reserved
Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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