Summary Thoughts on Technical Analysis

Fundamental supply/demand factors are the long-run and over-riding determinants of cotton price movements. It should be obvious from my discussion of specific technical indicators that I take technical analysis with a grain of salt. I am not aware of any current research showing the validity or reliability of various technical indicators as predictors of near-term cotton price movements. I do, however, have anecdotal evidence that many cotton brokers, speculators, floor traders, merchants, grower/hedgers, and index fund managers pay attention to technical indicators. And during the last four years I observed speculative buying or selling lead cotton futures futures either up or down between five and ten cents apparently based on little more than technical issues. If such price moves could hurt or help your marketing plan, then that is a valid reason for paying some attention to technical analysis.

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