SINGAPORE, Oct. 15 (Reuters) - The New York cotton second-month contract <CTc2> is expected to retrace to $1.06 per lb first and consolidate above it over the next four weeks as the current rally may peak around $1.20.
A wave classification on the rise from the March 2009 low at 40.01 cents labels the current sharp rise as a wave "v", which is the last surge of a five-wave cycle.
The wave "5" is typically difficult to be pinpointed by a final peak, however, based on an upper channel duplicated from the lower channel, the wave "v" may end around the upper channel line resistance at $1.20.
The following retracement is expected to drive the price down to the range of the wave "iv" between $1.06 and $1.00, and it may take several weeks for cotton to regain its bullish momentum and rally towards $1.25 again.
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