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USDA Report A Likely Catalyst for Cotton Breakout

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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

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About the author

Eric entered the workforce during the summer of 2007 as an apprentice tradesman just before the big crash and recession which followed. The impact of which strongly inspired his interest in the financial industry and began him as a student of the markets. Eric worked throughout the following years developing strong communication skills and risk management practices in the aviation and marketing industries before ultimately getting licensed and turning his passion into a career as a market strategist with RJO Futures.

Sector Focus

Eric specializes in trend following strategies in metals, stock indices, energies, grains, softs.

Analysis Preference

Supply and demand data ultimately determines the long term trend direction. However, Eric uses basic chart patterns and price action to determine the impact news and information has upon the markets, which provides insight to the short term volatility and provides clarity on timing for entry and exit of a position.

Strengths and Trading Philosophy

There are opportunities in the futures markets each minute of every trading day. Spreads and option strategies are utilized by Eric as they present themselves. These opportunities may tend to take place after a long buildup or extreme events. When they reveal themselves, he believes in using discipline during the three phases of a complete trading strategy: Information, Action, and Exit. Diligence in acquiring, organizing and reviewing solid and reliable information, coupled with knowing the risk that is involved. Eric's strength is confidence in taking decisive action to use opportunities revealed by the information.

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