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March 05, 2023
While the Cotton future was in the midst of a 3 day downtrend— in which it lost a total of 1.95%— A possible reversal detected from Friday; ICE Cotton closed Friday at $84.18 per pound (with a daily low of $84.18) after ending Thursday at $83.71 and gaining 0.56%.
Friday's price action generated a Japanese candlestick pattern showing a "hammer” chart pattern. When appearing during a bearish trend, as it is now, it is typically considered to be an indication of a trend reversal. Concerning technical analysis and more specifically, trend indicators, ICE Cotton made an initial breakout above its 50 day Simple Moving Average at $84.48, a potential indicator of a newly emerging bullish phase. Price action remains constrained around the key Fibonacci level of $84 currently serving as resistance Analysis based on the asset volatility indicates that Cotton's upper Bollinger Band® is at $86.79, this is a slight indication of a slowdown. Chart analysis suggests the Cotton future broke through the $84.26 resistance and climbed 8 cents above it.
All in all, the technical analysis suggests ICE Cotton has no clear-cut direction.
This rally in the Cotton future's price coincides with other Softs as Sugar went up by 3.05% Friday, and closed at $20.93.
Meanwhile, Coffee is down to $178.2, losing $4, after ending the previous session around $182.2.
Trading mostly sideways for 2 months. Cotton has fallen back around 45.96% from the significant high of $154.89 set 10 months ago.
