Trade of the week: short New York cotton

The reason for this short trade is that the current September peak was formed marginally below late last year’s high and looks short-term toppish.

(Video summary)

Last week's trades: OJ, GBP/USD, DAX

In this video, IG analyst, Axel Rudolph, talks about his recent trades and gives a new trade idea. He started the month by trying to make a short trade on orange juice futures, but unfortunately, it didn't work out because the price went above previous highs.

He also tried to go long on the GBP/USD, but that trade also stopped out because the Bank of England (BoE) didn't raise interest rates. Despite these losses, Axel's trade on the DAX 40 contract is currently doing well and has gained 400 points so far. There is a possibility that it could fall even further, so traders have the option to keep holding onto their profits, lower their profit target, or take their profits now.

Short cotton

Looking forward, Axel suggests looking at US cotton futures. At the beginning of the month, there was an unsuccessful attempt to break above the high seen in November of the previous year. Since then, the price has come down and stayed stable, without any other attempts to go up. Based on this observation, the suggestion is to make a short trade on cotton, preferably after a bounce back in price, but it could even be done now. The goal for this trade is for the price to go below the psychological 8,000 level, and to manage the risk, the stop-loss should be placed just above the previous highs at 9,002.

So, to summarise the trade suggestion for the week: Axel advises going short on cotton futures, with a target below 8,000 and a stop-loss above 9,002. By making this trade, you are betting that the price of cotton will go down, and you have a specific level where you will exit the trade if the price goes against you. Remember to always do your own research before making any trades and be aware of the risks involved.