Usdcnhbreakout
USDCNH approaching support, potential for a bounce!
USDCNH is expected to drop to 1st support at 10.67524 where it could potentially react off and up to 1st resistance at 10.74484.
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Yuan USDCNH - Wave 3 of 3 - Motive WaveSince the start of the trade war between the US and China, the Chin. Yuan has already depreciated by 8% against the US dollar. This will make Chinese products cheaper and thus cushion the US tariffs. At the same time, all US products will be 8% more expensive, plus tariffs.
At the same time, US dollar-based loans are becoming more expensive and are likely to worsening the financial situation of a number of Chinese companies and thus lead to market consolidation.
As you can see in the timetable, the pattern is Impulsive and the yuan is inside of the (3) circled 3. The RSI is already in the overvalued area so I expect shortly that wave (3) end and a subsequent correction wave (4) start.
Best Regards
Stefan Bode
P.S. Do not forget to agree.
Yuan weakness is not being confirmed by divergent Dim Sum bondsUSDCNH may be due for a correction towards 6.60.
The Yuan has weakened to 6.70 per dollar and the pair appears overbought on a weekly and daily basis. Having failed to provide a confirmatory close above this key level, we may see a correction towards the 38% Fibonacci retracement level standing at 6.6056
In the meantime, the highly correlated Dim Sum bond ETF (inverted) has failed to make higher-highs in sync with the USDCNH rate's attempt. Combined with negative RSI divergence on the weekly chart, it may be foolish to buy before we see confirmation from the bond market or technical retracement to 6.6056 or lower.
Disclosure: Long USDCNH remains one of my high-conviction ideas and has been a core position
USDCNH 2hr 4mo wedge breakoutTight range, tight moving averages, recent usd/cnh volatility.
Note the dark blue MA which may act as support for the bottom of the wedge. We want a candle printed below it for confirmation of support collapsing before we enter. We don't want to be first in the trade; we want to be correct.