Trading the trend: long NY cotton
Front month NY cotton futures continue to trade in an upward trend and we would like to use the current minor corrective move lower to go long with a stop loss at 8,270 and an upside target around 9,000.
(AI Video Summary)
Previous New York Arabica coffee trading outcome
In this week's "Trading the trend" video, the host Axel Rudolph talks about a previous trade he made on New York Arabica coffee futures, which has been profitable so far. He explains that he entered the trade at a price of 1860 after the price of coffee had dropped. Now he has two choices: he can either move his take profit level to break even, so he won't lose any money, or he can adjust his stop loss level to protect his investment. He wants to make sure he doesn't lose too much money if the price of coffee goes down again.
This week's trading opportunity
Next, Rudolph talks about his interest in New York cotton futures. He mentions that the price of cotton has been going up since November of last year, and he believes it will continue to go up in the coming weeks and months. He wants to buy New York cotton front month futures at the current price, but he wants to set a wider stop loss level. This means he's willing to tolerate more loss in case there is a temporary drop in the price.
To decide where to set his stop loss, he'll look at previous price levels where the price of cotton had support and resistance. He plans to set his stop loss below the mid or early December high, which acted as support in the past. He also considers the 200-day simple moving average, which is a long-term indicator, and the December to January uptrend line. These indicators gives him more confidence in his trade.
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