USDA Report A Likely Catalyst for Cotton Breakout

Dec 19 coffee futures trading in consolidation since August 5th have been building energy for a notable move upon breakout. The market has been gaining bullish strength on the fact the sales have been stronger than anticipated considering the US/China trade war with further support provided by declining crop conditions. The technicals show divergence between a declining price trend and rising bullish momentum which is a solid bullish indicator in my opinion. If this upcoming USDA report favors bulls with such a heavy short by the funds we could see a large move up on short covering momentum alone. Timing will be important if you intend on taking the bull side as it may only be a short term move unless there is a more intense supply threat or rapid demand growth. As anyone who traded corn this summer will tell you, Id heavily recommend best practice on your risk management if taking a position ahead of the USDA report. To learn more about using chart patterns and indicators you may download our free Technical Analysis Trading Guide here, or click the link below Cotton Chart