I had talked earlier about the Triangle inside a Triangle pattern and the bearish implications it tends to forecast.
Notice also that the Bollinger Bands are really starting to squeeze together and this tells us that volatility is about to enter the market.
The combination of the Bollinger Bands, The Triangle within a Triangle and the Commercial Traders leaning so heavily on the Short side causes me to embrace a breakout to the downside.
The really important thing to remember here is that Cotton is about to make a sizable move and we do not know 100% which way that move will be, but we know it is on its way. So embrace either breakout of the triangle knowing that the ensuing move can easily produce 400% plus on your initial margin.
It is exactly these kinds of set-ups that we as speculators wait for as they are very high probability and they trend for an extended period of time. These types of set-ups can contribute as much as 20% of our yearly trading profits if the commodity is traded correctly.
Keep close tabs on this one as I see the move starting sooner rather than later.
As always, use a protective stop on all of your positions and never take on more leverage than your trading account can handle.