On Wednesday, the cotton continuous futures contract on the Multi Commodity Exchange of India (MCX) reached a high of 25,080 a bale and saw selling pressure at higher levels. However, the commodity found support around 24,500 and rebounded, rising 0.45% to trade around 24,760 levels on Thursday.
The contract found support around approximately 15,000 in early May 2020 and bottomed out. The contract has been on a long-term rise since then. In late May, it broke over a major resistance level of 22,300 and proceeded to rise. The contract is trading significantly above its 21- and 50-day moving averages.
The short-term rise will continue as long as the contract trades above the immediate support level of 23,500. On the upside, a big rebound over the contract’s immediate resistance level of 25,000 might propel it higher to 25,500 and eventually to 26,000 levels. The daily and weekly relative strength indices are both in the positive zone, supporting the uptrend.
If the contract goes below the immediate support level of 23,500, it will reintroduce selling pressure and drag the contract down to 23,000, and then to 22,250.