Chart of the day: Support for Zhengzhou cotton
Zhengzhou cotton futures are not the most active, reflected in the way the contract charts, something a trained eye can usually spot easily. One can see lots of gaps between the candles – because there are few trades at various price levels; the candles are often very small, caused by low volume, followed by very big ones when a seller finds there are no bids (and less often vice versa); trend lines do not hold well; and support/resistance levels are unclear. We have spotted these here but still feel the trend to higher prices will kick in soon. Support from a secular trend line, the rising Ichimoku cloud and a lagging line, which is also supported by a cloud, suggests the next target could be 3,500 yuan (US$553) per tonne.
Nicole Elliott is a technical analyst