Pro Farmer Senior Market Analyst Rich Posson says funds recently returned to the buy side following improved basis, suggesting cash traders viewed the decline into a Level 2 business cycle low as overdone. "We now need to see rising open interest as prices rally to show new longs were created," he says. "The five-week stochastic is long from a buy signal made in recent weeks and the indicator is not yet overbought. The forecast is that demand is on the rise from a Level 2 low into a Level 1 peak due in May."
In the July cotton futures chart below, Posson uses technical indicators such as stochastic, moving averages, trendlines as well as his business-cycle analysis:
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