Cotton (March):Cotton futures continue to consolidate to start the week as traders search for new news to give us a bigger directional move. Last weeks USDA report is behind us which will put attention on weather in areas that have been plagued by drought. Rains are expected in areas of Texas over the next 1-2 weeks which could spark another round of long liquidation. From the technical perspective, not much has changed since our Sunday afternoon update. The bears are in control here as the chart appears to be forming a head and shoulders pattern. Bulls can change the tide but have a lot of work to do to do so. First resistance comes in from 77.65-77.74, this pocket represents the 50-day moving average and a key Fibonacci retracement level. On the flip side, first support comes in at 75.60 which represents the middle of the range from the August lows to the January highs. A conviction close below opens the door to another leg lower.
Resistance: 77.65-77.74**, 79.08**, 80.39****
Support: 75.60**, 73.21-73.45***, 71.59**
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