Corn Prices Hit A 5 Week High, Will Cotton Prices Break The 70 Level?

I will be recommending a bullish position if prices close above 3.85 while then placing the stop-loss at the contract low which was hit on September 9th at 3.65 as the risk would be $1,000 per contract plus slippage and commission as the chart structure is outstanding due to the low volatility that we have experienced over the last several months.

Corn prices are now trading above their 20 day moving average but slightly below their 100 day which stands at major resistance at 3.91 as the USMCA trade agreement will be passed this week as that is a very bullish fundamental factor coupled with the fact that the Chinese trade agreement has been written in stone as I think the bottom has occurred in the grain market as these are very bullish factors for corn prices which still historically speaking are depressed.

The large money managed funds are heavily short corn while adding another 30,000 contracts last week as they believe lower prices are ahead, however I disagree with that situation so play this to the upside as the risk/reward is in your favor.

TREND: HIGHER–MIXED 

CHART STRUCTURE: EXCELLENT

VOLATILITY: INCREASING

Cotton Futures

Cotton futures in the March contract is currently trading higher by 45 points at 67.25 reversing some of the losses that we witnessed last Friday as prices are still hovering right near a 5 month high.

The large money managed funds are still short this commodity by 3,000 contracts as they still believe lower prices are ahead, however I have been recommending a bullish position from around the 66.60 level and if you took that trade continue to place the stop loss under the November 21st low of 63.70 as an exit strategy as the chart structure will start to improve in next week’s trade therefor the monetary risk will also be reduced.

Cotton prices are trading above their 20 & 100 day moving average telling you that the trend is to the upside with the next major level of resistance around the 68.00 level as I think that could be tested in this week’s trade as optimism that China will become a more active buyer of U.S cotton should be supportive in the coming weeks ahead.

At the current time I have several bullish recommendations as I think the commodity markets in 2020 will have significant rallies from these depressed levels as I do think with the emergence of all these trade deals occurring the bearish situation has ended as the risk/reward is in your favor to the upside.

TREND: HIGHER

CHART STRUCTURE: EXCELLENT

VOLATILITY: INCREASING

This article was written by Michael Seery (CTA—COMMODITY TRADING ADVISOR)  www.seeryfutures.com