Technical Analysis

This week we are pleased to introduce a dedicated Technical Analysis section to the GSX Weekly Research offering. Designed to complement our fundamental market commentary, this new addition provides deeper insight into market trends, key price levels, and potential trading scenarios, helping clients develop a more complete view of commodity market dynamics.

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The 254 target region discussed in prior commentary was reached last week but, rather than holding, price promptly collapsed further to the downside. This follow-through indicates an extension within wave (iii), with the next Fibonacci support at the 218–230 region, outlined by the green box.

The extension also implies that the subsequent wave (iv) rally, when it arrives, will peak lower. We have outlined a red area of Fibonacci resistance which doubles as a neckline in a classic head-and-shoulders formation — more on this once a rally emerges.

With the extension carrying below the standard 1.618x projection for wave (iii), a new element to note is an alternate count: wave (v) may have completed within the green box, with waves (iii) and (iv) already having completed in March 2026. We will track this scenario as 'alt (v)', marked up on the chart.

For now, the daily chart simply implies downside continuation toward the next Fibonacci support area at 218–230 in either scenario. This is where we must await signs of technical support.

CT has simply plunged lower, with only a brief pause at the resistance area outlined previously. Price moved directly to the 0.50 retracement at 73.5 and, in fact, sliced straight through it.

We can read this in one of two ways: either a small (b)-wave emerged out of the green support area, or wave (a) is not yet complete. Either way, the next level to watch is 70 — the 0.618 retracement — which could complete all of wave 2.

The primary scenario is now that the small bounce tracked as a (b)-wave, and we are completing a sharp wave 2 with the (c)-wave underway, targeting the 0.618 retracement at 70.

Also of note, the red 200DMA is converging on the 70 area, which would act as very strong support for cotton futures once that region is reached. In short, we expect price to continue directly lower from here against the current risk-off backdrop.