CT1! trade ideas
CT (Cotton) - 9 months SYMMETRICAL TRIANGLE══════════════════════════════
Since 2014, my markets approach is to spot
trading opportunities based solely on the
development of
CLASSICAL CHART PATTERNS
🤝Let’s learn and grow together 🤝
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Hello Traders ✌
After a careful consideration I came to the conclusion that:
- it is crucial to be quick in alerting you with all the opportunities I spot and often I don't post a good pattern because I don't have the opportunity to write down a proper didactical comment;
- since my parameters to identify a Classical Pattern and its scenario are very well defined, many of my comments were and would be redundant;
- the information that I think is important is very simple and can easily be understood just by looking at charts;
For these reasons and hoping to give you a better help, I decided to write comments only when something very specific or interesting shows up, otherwise all the information is shown on the chart.
Thank you all for your support
🔎🔎🔎 ALWAYS REMEMBER
"A pattern IS NOT a Pattern until the breakout is completed. Before that moment it is just a bunch of colorful candlesticks on a chart of your watchlist"
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⚠ DISCLAIMER ⚠
The content is The Art Of Charting's personal opinion and it is posted purely for educational purpose and therefore it must not be taken as a direct or indirect investing recommendations or advices. Any action taken upon these information is at your own risk.
Clear Diversions = Time to enter### **Cotton No. 2 Futures (CT1!) - Bullish Divergence & Trade Setup**
(**Not Financial Advice**)
#### **📌 Key Observations:**
- **Bullish Divergence**: RSI is making higher lows while price is making lower lows → Indication of **potential reversal**.
- **Support & Resistance Levels**:
- **Support:** 🟢 **65.73** (Major Demand Zone)
- **Resistance Levels:**
- **67.29 - 67.44** (First Resistance Zone)
- **68.17 - 68.40** (Strong Resistance, possible reaction area)
- **84.60** (Key Liquidity Area, Major Resistance)
#### **🎯 Short-Term Bullish Targets (TP Levels)**
1️⃣ **67.36 - 67.44** → First Take Profit (Minor resistance, watch for reactions)
2️⃣ **68.40** → Strong resistance, key breakout level
3️⃣ **94.60** → Major liquidity zone (long-term target if momentum builds)
#### **🔹 Trade Setup Consideration:**
- **Entry:** Around current price action if it holds above support.
- **Stop-Loss (SL):** Below **61.73** to manage risk.
- **Confirmation:** Price closing above 67.44 would strengthen bullish case.
Would you like a risk-management strategy for this trade? 🚀 (**Not Financial Advice**)
Cotton Futures: Decoding the Matrix of Market ForcesCotton, a seemingly unassuming commodity, is quietly aligning for a significant bullish move. But remember—this is not a prompt for reckless action. The entry is reserved for those who wait for the Daily timeframe to confirm the trend change.
The Codes of the Cotton Conspiracy
Code #1: The Commercial COT Index
Commercials are not merely dabbling—they are at an extreme in positioning, maxed out over a 26-week lookback. Their hands are heavy with longs, signaling a brewing storm that only the wise will prepare for.
Code #2: All-Time Extreme Positioning
For the first time since 2019, commercials hold their maximum long positions. Unlike 2019, these positions are at higher prices, implying deeper convictions. Meanwhile, Large Speculators are excessively short—a telltale sign that the tide may soon turn. Both are at an all-time extreme in positioning.
Code #3: Valuation Metrics
Cotton stands undervalued against the pillars of Gold, DXY, and Treasuries. The market’s mispricing is your opportunity, should you dare to seize it.
Code #4: Open Interest Analysis
Open Interest (OI) has been climbing steadily, a silent crescendo. Who is fueling this growth? The commercials—those orchestrators of market moves—are discreetly accumulating, signaling an impending bullish wave.
Code #5: ADX Over 60—The Endgame Approaches
The ADX has breached the critical threshold of 60, a harbinger of trend exhaustion. Confirmation lies in the ADX’s roll-over or the Large Speculators’ retreat from their short positions.
Code #6: Spread Divergence
As prices sink to new lows, the spread between the front and next month contracts defiantly rises—commercials are eager for the front month, a potent sign when paired with extreme positioning.
Bonus Codes: Hidden Layers of Accumulation
Insider Acc Index and ProGo hint at quiet accumulation. Momentum shows bullish divergence, %R enters a buy zone, and the oversold stochastic adds another layer of intrigue.
The Flaws in the System
Yet, no system is without its anomalies. Small Speculators are excessively long—a peculiar deviation, given their knack for misjudging bottoms. This anomaly presents two scenarios: a merciless long squeeze forcing out the naive, or a rare stroke of luck for the masses. Moreover, while True Seasonal is misaligned, remember that seasonals reflect historical ghosts, while positioning unveils the machinations of today's masters. Always lean towards positioning as your guide, not seasonals.
The Red Pill Awaits
The stage is set. The players are in position. The market whispers secrets only a few are willing to hear. Cotton’s matrix is laid bare—whether you act or remain a spectator is the choice only you can make.
But beware, the rabbit hole goes deeper than you think. Are you ready to follow?
Choose wisely.
Cotton: Navigating the DeclineCOTTON, in a long-term decline since last February is currently stuck within a narrowing range, with a minimum break above 70 cents per pound needed to change the negative outlook.
However, it is worth noting managed money accounts have held a net short position for a record-breaking 39 weeks. In the week to 21 January it reached a near record short position of 48.4k contracts, potentially increasing the risk of short covering on a technical break to the upside
Smart Money Positioned to LONG Cotton - COT StrategyDISCLAIMER: This is not trade advice. This is for educational purposes only to demonstrate how I am looking to participate in this market. There is significant risk involved in trading, do your own homework and due diligence.
COT Strategy
LONG
Cotton (CT)
My COT strategy has me on alert for long trades in CT if we get a confirmed bullish change of trend on the Daily timeframe.
COT Commercial Index: Buy Signal
Valuation: Undervalued vs Gold
Extreme Positioning: Commercials around max long of last 3 years - bullish. Small specs around max short of last 3 years - bullish.
OI Analysis: "Bubble Up" of positioning happening between commercials and large specs = bullish.
COT Small Spec Index: Buy Signal
Supplementary Indicators: UO & Momentum (not yet confirmed)
Remember, this is not a "Long Now" idea. These indicators are not timing tools. They simply tell us that this market could have a move of some significance to the upside, which we will participate in with a confirmed Daily trend change to the upside.
Good luck & good trading.
Upside Ahead for Cotton - COT Strategy BuyDISCLAIMER: This is not trade advice. This is for educational purposes only to demonstrate how I am looking to participate in this market. There is significant risk involved in trading, do your own homework and due diligence.
COT Strategy
LONG
Cotton (CT)
My COT strategy has me on alert for long trades in CT if we get a confirmed bullish change of trend on the Daily timeframe.
COT Commercial Index: Buy Signal
Extreme Positioning: Commercials more long than they've been in 3 years = bullish.
OI Analysis: We are seeing a "Bubble Up" between Commercials & Large Specs. This is a sign of a significant bottom being formed.
Valuation: Undervalued VS Gold
COT Small Spec Index: Buy Signal
Supplementary Indicators: %R Buy Signal
Remember, this is not a "Buy Now" idea. These indicators are not timing tools. They simply tell us that this market could have a move of some significance to the upside, which we will participate in with a confirmed Daily trend change to the upside.
Good luck & good trading.
Cotton #2 overextended, possible retracementAnalysis: Price experienced a sharp decline over the short period and can now be seen as extended. Reversal position (long) can be taken to trade the potential retracement or even reversal.
Long opportunity: High risk Long at market as reopening towards 83.89 as Take Profit - 1 level.
Cotton # 2 Futures. The Epic 52-Week Highs BreakthroughThe main technical graph is for Cotton # 2 Futures that firmly up this year, with solid 13.5 percent performance in 2024 to this time.
The weekly Commitment of Traders report showed managed money cotton traders dropped 6k existing shorts and added 11.6k new longs during the week that ended 2/6. That raised their net long to 46,344 contracts. Commercial cotton hedgers added 17.5k short hedges for a 90,540 contract net short as of 2/6.
NOAA’s 7-day QPF has another band of heavy precip for the South/East. From the Gulf of TX through TN/NC/KY accumulations top out near 4”. Most of Northern LA, North/Central MS, Northern AL, and Northern GA will get ~2”. Central TX cotton area will also get ¾ to 1 ½” of precip to build up soil moisture reserves. Yesterday’s Drought Monitor confirmed there was still some D3-D4 in Northeast MS, but the total D3-D4 area has fallen from 29% to 2% since December 5th for the South-Southeast.
The monthly WASDE update showed a 150k bale lighter domestic cotton use, now at 1.75 million bales. Exports, however, were raised by 200k bales to offset. On net ending stocks tightened by 100k to 2.8 million in the report.
The main technical graph for Cotton # 2 futures ICEUS:CT1! indicates on 52-week highs breakthrough, as massive 20-years SMA supported the price over the past 12-15 months.
Weekly RSI(14) sub chart is to confirm this epic breakout, while COT data says, Largest speculators are still positive in net position all the time, keeping calm above Zero-level, while producers are to massively sell the production.
Cotton Breaks Bearish TrendCotton has been in a nice uptrend since the lows back in June, and although we have seen some chop recently, we are still trading in this wedge with defined support and resistance. Looking more at the technical side, Cotton broke out of a bearish trend on September 28th, and is looking strong as we are entering Q4.
Old Resistance, new support:
Looking at this chart, there was strong overhead resistance from the January high, and when the market started trying to take out that level, we saw sellers’ step in and bring the market back down. The market broke back out above this level on September 25th, and now this level will act as support that bulls will want to defend to keep process moving higher. This also lines up nicely with the strong trendline support, and a break below this level could send us back to neutral territory.
Overhead Resistance:
As this market is trending higher, there is still prices that need to be achieved to make the next leg higher. There is strong overhead technical resistance going back to the May ’22 highs, and this level has been tested and sold into three times. If the support pocket can hold, the re-test of this resistance point will be critical in judging the prices moving forward. Another rejection here could spark additional selling which could break the trend to the downside.
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Disclaimers:
CME Real-time Market Data help identify trading set-ups and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
*Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services.
Futures trading involves substantial risk of loss and may not be suitable for all investors. Trading advice is based on information taken from trade and statistical services and other sources Blue Line Futures, LLC believes are reliable. We do not guarantee that such information is accurate or complete and it should not be relied upon as such. Trading advice reflects our good faith judgment at a specific time and is subject to change without notice. There is no guarantee that the advice we give will result in profitable trades. All trading decisions will be made by the account holder. Past performance is not necessarily indicative of future results.
Cotton Long Trade IdeaCotton has been in a range for a long time. Currently, we see a reversal. The drought in the USA and Asia has significantly influenced the supply side, which is noticeable in the price. Also, seasonally, an upward trend is expected. However, the COT data from the COT report do not confirm the buy signal. Nevertheless, I still anticipate an upward trend if the fundamental situation in the market fully prevails
Cotton price will increaseHere are some recent information that have increased cotton prices:
Drought in Texas: The US state of Texas is a major cotton producer, and the ongoing drought in the state is expected to reduce cotton production by 2.5 million bales in the 2023/24 season.
Reduced cotton production in China: China is the world's largest cotton producer, but the country is also facing challenges in cotton production, including climate change and water scarcity. The Chinese government has forecast a 10% decline in cotton production in the 2023/24 season.
Increased demand for cotton: The global demand for cotton is expected to increase in the coming years, driven by growing demand for apparel and textiles in developing countries.
Weaker US dollar: The US dollar has been weakening against other currencies in recent months, making cotton exports from the US more affordable for buyers in other countries.
COTTON - BUY
Entry: 86.70 - 87.00
TP1: 87.60
TP2: 88.14
SL: 86.25
