Market Analysis: The Bearish Trend Of Short-Term Cotton Futures Has Not Changed

On August 28, cotton futures fell for the third day in a row. The market was worried about China's demand and the increase in production in the northern hemisphere, and the bearish trend of the technical graph did not change.

On the same day, international oil prices fell due to the weakening of worries about the Libyan supply crisis. In addition, Chinese demand is not strong enough. Nevertheless, the market generally expects that OPEC may increase production in the fourth quarter.

The dollar index rebounded driven by month end buying and technical buying, and the market continued to wait for macroeconomic data that may affect the Fed's interest rate cut. The market expects the US GDP to grow by 2.8% in the second quarter and 1.4% annually.

On Wednesday, ICE cotton futures closed sharply, hitting a low point in nearly a week, under the pressure of selling triggered by technical figures and the resurgence of the US dollar. Traders are waiting for guidance from this week's US cotton export weekly report. Last week, the contracted volume of American cotton was only 93000 bales, lower than 110000 bales the previous week, and China basically did not purchase.

In general, the market still generally believes that the technical graph trend of cotton is still downward. The reason for this conclusion is that the low point of the contract in December has been declining, and the high point has also been declining. The line connecting the previous high points is obviously downward, and the resistance level above is very obvious, such as the high points of 70.80 cents and 71.30 cents this week.

Technically, the current support point of December contract is 69 cents, followed by 68.50 cents, and the upper resistance level is 70.50 cents and 71.45 cents. Analysts predict that cotton prices may remain at 67-70 cents in the short term.