Technical Analysis

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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With the extreme spike this week above our invalidation area of 338, it's now clear KC is indeed further along in its wave count, with a wave (v) bottom formed a little below our target of 254. The key callout on the long-term chart now, is that this spike landed on the 0.618 retracement, which should ideally choke the rally if we truly are in a long-term decline as is our base case. There is also a lot of technical congestion up here: a lot of beans changed hands at these prices. Base case says this region will ultimately be left to the downside. However caution is warranted until we see some confirmation of a top in the micro analysis.

KC has handed us the first real curveball since covering the market, with a blowout +16% move through resistance. This price action aligns to the base case as a wave 2 up in a bigger (C) wave decline. However, at present the micro structure is not ideal. In fact, this region is a great test of the base case, that KC is big picture bearish. The spike up can easily be counted as impulsive (not corrective). So we begin tracking a bullish alternate case in orange. This counts the action from 2025 as an ABC correction, implying higher targets to come. Something to watch.

Cotton futures continue to build a bullish strategic setup, continuing higher since last week. Once this near-term wave structure is bedded down, we continue to expect much higher prices in cotton going into 2027, in the long term wave 3 up.

The structure off the June 26th low counts best as a b wave up, and appears almost complete. Next, we would expect a c wave down to complete wave ii around the 74.40 region. From there we expect a strong move to fresh highs in wave iii. It is possible cotton already bottomed at the 50% retracement for wave ii, but that is a less likely scenario.