Cotton Testing New Highs

As of mid-morning on Tuesday, January 15, the December ’08 contract on the New York Cotton Exchange is at 79.70. Last Friday and yesterday, the market was up the 300-point limit each day. A new life-of-contract high of 80.56 was set yesterday, although the contract moved back below 80 cents at the close.

So it's fairly obvious that the psychological line of resistance is 80 cents. The rule of thumb for a continued bullish move is for the price to go above a major line of resistance - in this case it's 80 cents - and make three closes above it. If and when that happens, 80 cents then becomes a line of support.

After a disastrous November, December cotton has moved up almost a dime.