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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Arabica continues to follow the path set out in prior GSX commentary, within macro wave (C) lower. Action over the past week aligns to our base case as this being wave (iv) up, leaving the alternate scenario — a larger degree bottom in alt (v) — less probable. From here we expect KC to chop higher towards 300 before commencing the wave (v) decline toward 215.

Over the week KC delivered the breakout from the downtrend channel outlined in last edition’s tactical notes. We also saw a clean rejection from our red resistance box at 280, playing out cleanly as waves a and b. Thus far the b-wave has found support at the top of our channel. With those moves in the bag, we can fairly confidently project wave c of (iv) toward the 295–300 target, using Fibonacci confluence in that region.

CT fell back to the 0.618 retracement of the entire 2026 rally in recent weeks. Once that 70 target was acquired, a multi-week rally has ensued. This bodes well for the bottom being completed in wave 2, and offers the first indications that we may have a macro wave 3 on our hands in cotton. We must exercise caution, however, as clean macro impulses are rare in commodity charts, and a wave 3 target would sit much higher than the 89 peak reached in 2026 thus far. We remain vigilant for signs that such a bullish base case may prove incorrect.

In the short term, cotton continued higher in impulsive fashion, extending its advance off the 70 target region. There is a good chance we now have a small-degree five waves up in place for wave i, which would call for a corrective wave ii before the next leg higher. It remains possible to push a touch higher before the top is in, so we are not ruling out a marginal new high to complete the count. Either way, what’s important is that we are approaching a solid buy opportunity once this rally retraces at least 50%, offering a low-risk entry into what we expect to be the early stages of a big move higher.