ICE Futures U.S. cotton for March delivery on Tuesday gapped higher on the daily bar chart and hit a fresh four-week high of $1.4597 a pound as of this writing. The bulls are making a strong run at the all-time record high of $1.5195, scored on November 10. March cotton futures prices are in a strong three-week-old uptrend on the daily bar chart, making a solid recovery from the low of $1.1113 scored on November 24.
An examination of major bull runs in commodity futures markets shows that many times after a market has made a major high, prices will then back off sharply only to see prices make a surprising and strong comeback to challenge the major high that was recently achieved. However, more times than not the previous high is not surpassed, and if it is surpassed, it’s not by much. The price action described just above is what many times forms bearish double-top reversal patterns on the charts. However, make no mistake: the cotton market bulls do at present have strong upside near-term technical momentum and would be top-pickers need to think long and hard about stepping in front of a steaming locomotive. Stay tuned!–Jim Wyckoff