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Yuandevaluation

Ascending Triangle Points Towards Yuan Devaluation This SummerNote: the technical indicators show a TTM squeeze ready on EVERY TF except Monthly, which is about to happen shortly by this summer - which means a massive move will happen. BOJ will blow up this summer and will devalue against the dollar forcing China to devalue to stay export competitive. I see a 50% devaluation - which will have the opposite effect on everyone else. If China devalues, that means they invite inflation into their economy, which forces deflation throughout the whole world. This will push up the dollar and blow up everyone else's currency. I see the dollar TVC:DXY going to 140-160+ before it too blows up. Of course this implosion will be blamed on some external false flag event - while the FED trots out CBDC's via DigitalID anchored to social credit scores that allows the FED to effectively use negative interest rates via social credit scores and time value of the credits. Gold and silver really won't matter because people will be looking for food.
Long
by EmptyEternity
CNH: Hedging Currency Risk amid Heightened UncertaintiesCME: USD/Offshore RMB ( CME:CNH1! ) Even though the Chinese Yuan is not a component in the US Dollar Index, Dollar-Yuan exchange rate generally tracks the dollar index. If dollar gains in value, most foreign currencies depreciate against it, yuan included. When dollar is weakened, the opposite holds true. Foreign currencies appreciate relative to dollar. However, this year the two trends diverged prominently. Dollar index was quoted 103.2 on Monday, down 0.8% year-to-date. Meanwhile, dollar/yuan rate moved up 5.2% to 7.26. A higher price quote means that yuan depreciated against the dollar. In conventional thinking, yuan should have risen when dollar declined. The reversal of the trend could signal a major technical breakout down the road. In the past ten years, the Yuan has been trading in the range of 6.0 and 7.3. looking back in early 2000s, the official exchange rate used to be set at a narrow band around 8.28. Exchange Rate Key Driver: Interest Rate Parity Let’s revisit a basic concept in economics. The interest rate parity (IRP) states that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. In plain English: An investor has the options of investing in either dollar or yuan. With higher interest rates, dollar asset will produce a higher return. To make yuan more attractive, the investor would need to get more yuan per dollar. Therefore, yuan will depreciate. This is the logic behind the IRP. It is called the Law of One Price. Since the Federal Reserve began hiking interest rates in March 2022, the Fed Funds rate has risen 525 basis points in the following 17 months. At the same time, the People’s Bank of China cut interest rates by 15 basis points, from 3.70% to 3.55%. • The US-China interest rate spread has widened by 540 basis points. • If the investor held dollar denominated asset, his return would be 7.65% higher than someone holding the same asset denominated in yuan (=5.40% x (17/12) years). • Meanwhile, the exchange rate went from 6.39 to 7.26, a 12.0% Yuan depreciation. In this example, the IRP explains 64% of the total variation of Dollar/Yuan exchange rate. It is remarkable that fundamental economic theory works so well in the real world. Relative Stock Market Performance Another key factor driving capital flows in and out of China is the performance of its stock market relative to that of the global market. China’s stock market had a good start this year. The hope of economic recovery pushed the Shanghai Stock Exchange (SSE) index up by 9%. However, economic data deteriorated markedly in the second quarter, which helped erase most of the gain. • As of Monday, the SSE produced a meager 1.8% return YTD. • For a comparison, the S&P was up 15.8% while the Nasdaq gained 37.8% YTD. Relative Strength in the Economy While interest rate spread and stock market performance drive the exchange rate trend in the short- to medium-term, the long-term value of one country’s currency is determined by the strength of its economy. The US economy has so far managed to avoid a hard landing: • Solid job market (unemployment rate below 4%); • Strong GDP growth (the economy expanded from Q1 to Q2); • Inflation getting under control (headline CPI around 3%); • A banking crisis is contained (only a handful of bank failures); • The debt ceiling crisis is resolved (new bill suspected the debt ceiling until 2025). This year, China’s economic engine appeared to have lost steam. • GDP growth slowed dramatically after a brief spike in Q1; • Export declined by double digits; • A gigantic housing market crisis is brewing to the boiling point; • Debt crisis with provincial and local governments, many are technically bankrupt; • High unemployment rates (youth unemployment exceeding 20%); • Deflation discourages business activities and put further pressure on the economy. Could the second largest economy in the world weather all the headwinds? This heightened risk profile warrants the need to proactively deploy risk management strategies. Hedging for Currency Exposure Amid Rising Risk Outlooks US-China relations remains the top geopolitical risk amid heightened uncertainties. In recent years, the relations have hit the lowest point since President Richard Nixon visited China in 1972. While China now accounts for a smaller share of the US international trade, in 2022, both U.S. exports to China and imports from China continued to grow, according to the Bank of International Settlement data. • U.S. exports totaled $153.8bn, an increase of 1.6% ($2.4bn) from 2021; • U.S. imports from China totaled $536.8bn, an increase of 6.3% ($31.8bn); • And the trade deficit with China was $382.9bn, an increase of 8.3% of ($29.4bn). U.S. importers, exporters, and US companies operating in China all face significant risks when the exchange rate is so volatile. Some of the cost may be in one currency, while the revenue is in another. Hedging net currency exposure is key to locking in profit. Where is the Dollar/Yuan Exchange Rate Heading? In the previous sections, I highlighted the key drivers in the US/China currency exchange rate: relative interest rates; relative stock market performance; relative economic strength; and the state of the US-China relations. If things are moving unfavorably for China, I could see the yuan breaking out of the recent range and going above 7.50. There are a lot of moving parts affecting the outcome. CME Offshore RMB (CNH) is a futures contract on the Dollar/Yuan exchange rate. It has a notional value of $100,000 and is quoted as the number of Yuan per $1. In a hypothetical case, let’s imagine that a commercial firm expects to receive 10 million yuan in six months. Should the exchange rate go from 7.26 to 7.60, the expected receipt in dollar terms would decline from $1.38M to $1.31M, down $70K or -4.7%. The firm could hedge this exposure by buying 14 CNH contracts. The aggregate notional value is $1.4 million, matching over 10 million yuan at current market price. When yuan depreciates, futures price would go up as each dollar is getting more yuan. Therefore, when the firm loses money in business operation due to yuan depreciation, currency futures hedging would compensate for the losses. Holding 1 CNH contract requires $21100 in minimum margin. If the exchange rate moves by 1 tick, or $0.0001, the futures account would gain or lose 10 Yuan. A smaller firm could consider Micro RMB futures (MNH). It is 1/10 of the standard size CNH contract with a $10K notional. Margin requirement is 1/10 of the original, at $2110. Happy Trading! Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CME:CNH1!Long
by JimHuangChicago
1
Difference - China Yuan and Offshore Yuan The Chinese yuan, also known as RMB, is the official currency of China. It is used both onshore in mainland China and offshore in international markets. The offshore yuan, also known as the CNH (Chinese yuan - Hong Kong), is the version of the yuan that is traded outside of mainland China. It is traded in offshore financial centers, such as Hong Kong, Singapore, and London. The offshore yuan is not subject to the same restrictions and regulations as the onshore yuan. The main difference between the onshore and offshore yuan is that the onshore yuan is subject to capital controls imposed by the Chinese government, while the offshore yuan is not subject to these same restrictions. This means that the offshore yuan is more freely tradable and can be used for a wider range of international transactions, such as international trade and investment, while the onshore yuan is more restricted in its use. Offshore Yuan - Standard-Size USD/Offshore RMB (CNH) Outright: 0.0001 per USD increment = 10 CNH MICRO USD/CNH FUTURES 0.0001 offshore Chinese renminbi per USD CNH Option Google search: USD/CNH Monthly Options Contract Specs - CME Group Google search Frequently Asked Questions: USD/CNH options - CME Group Disclaimer: • What presented here is not a recommendation, please consult your licensed broker. • Our mission is to create lateral thinking skills for every investor and trader, knowing when to take a calculated risk with market uncertainty and a bolder risk when opportunity arises. CME Real-time Market Data help identify trading set-ups in real-time and express my market views. If you have futures in your trading portfolio, you can check out on CME Group data plans available that suit your trading needs www.tradingview.com
Short
by konhow
Wandering Balloon Deflates the Rise of Chinese YuanCME: USD/RMB Futures ( CME:CNH1! ) US-China relations are arguably the most challenging bilateral relations in the 21st century. It has been in a free fall since the 2018 trade conflict. The competition has intensified and spread to investment, technology, among other arenas since then. On November 14th, 2022, President Biden met with President Xi during the G-20 summit in Bali, Indonesia. This was expected to be a turning point to stabilize the relations. Secretary of State Antony Blinken planned a follow-up trip to China, scheduled to depart on February 3rd. However, a massive balloon floating in the skies of Montana causes a diplomatic panic. The US alleges that it is a high-altitude military surveillance balloon from China, while China claims that it is a civilian airship derailed by wind, a force majeure accident. Last Friday, Secretary Blinken announces the postponement of his China trip. The next day, U.S. military shoots down the balloon over the Atlantic Ocean off South Carolina. The drama between Washington and Beijing has significant impacts over the annual $700 billion bilateral trade. Tensions could be a nightmare for tens of thousands of US companies operating in China. Today, we focus on the most prominent market risk of all, USD/CNH, the US dollar – Chinese Yuan exchange rate. The Rise and Fall of USD/CNH In FX spot and futures markets, USD/CNH is quoted as Yuan per Dollar. When the quote of USD/CNH rises, CNH depreciates because each dollar can be exchanged for more yuan. Similarly, a falling quote represents dollar depreciation which in turn is yuan appreciation. How is the USD/CNH exchange rate determined? Interest rate parity (IRP) states that the interest rate differential between two countries is equal to the differential between the forward exchange rate and the spot exchange rate. The formula for IRP is: F0=S0×((1+ ic)/(1+ib)), where: Forward Rate=Spot Rate × ((1+ Country C’s Interest Rate)/(1+ Country B’s Interest Rate) ) The 10-Year US Treasury Yield is currently quoted at 3.623%, higher than the 10-Year Chinese Government Bond Yield of 2.934%. Plug these into the IRP formula with a spot rate of 6.792, we will arrive at a forward rate of 6.837. Examining the 1-year price chart of CME CNH futures, we find that Yuan lost 10,000 points between March and October last year, from 6.3 to 7.3. The trend closely correlates with the Fed rate hikes. This is a vindication of sound economic theory. While China’s central bank exercises control over its currency, in recent years it adopted open market operations and phased out strong-armed government directives. The parallel trends diverged in November, as China ended its 3-year-long Zero-Covid policy. China’s reopening becomes the main driver of USD/CNH, which receded 6,000 points from 7.3 to 6.7 in three months. Yuan’s strengthening has been interrupted last week as the Balloon incident hits the newswire. USD/CNH lost 900 points in two days, currently quoting at 6.792. In my opinion, as the Fed tightening cycle enters the last inning, it no longer has an overarching impact over USD/CNH. Going forward, US-China bilateral relations take over. Bilateral relationship between the countries will remain unpredictable. This is a developing story. Will there be a strong retaliation, or a mulled response? Different actions could swing the Yuan exchange rate from one extreme to the other. Hedging for Currency Exposure Amid Unstable Relations US importers, exporters, and US companies operating in China all face significant risks when the exchange rate is so volatile. Some of the cost may be in one currency, while the revenue is in another. Hedging net currency exposure is key to lock in the profit. US-China trade has been very unstable in the past few years. But overall, a “decoupling” trend has already been under way. In 2017, China was the largest US trading partner. Bilateral trade accounted for 16.9% of all US foreign trade. The most recent data for the first 11 months of 2022 shows a different story now: • Canada is the No. 1 US trading partner with $733.1 billion and a 14.9% share • Mexico is the 2nd largest, with $718.3 billion (14.6%) • China is now only the 3rd largest with $639.5 billion and a 13.0% share The US has become less dependent on China in its global supply chain. This is evident by the huge growth in bilateral trades with Vietnam (+122%), Taiwan (+102%) and India (+89%) in the last five years, while China trade only managed to grow 2%. Short-term Trades May Prevail In “Year of the Rabbit: Short-tailed Trading”, I discussed my preference for short-range trading this year over longer-term holding done in the past year. Market uncertainties pose more challenges in analyzing multiple moving targets with uncharted trajectories. The Chinese currency is exactly what I am talking about. Just when you think China’s reopening would induce a secular bull run, a wandering balloon out of the blue sky deflates that hope. I would not be surprised if we have a repeat of the 2018 Trade Conflict. When the tension between the two superpowers intensifies, it could swing the market wildly. For readers who have followed my stories, once again, we could leverage the game theory and event-driven strategy in response to this unexpected market event. In the past few years, I have deployed game theory and strangle options across a number of highly volatile and uncertain market scenarios, upon US-China Trade Conflict, the Russia-Ukraine Conflict, the Fed Rate Hikes, the US Midterm elections, and the US Debt Ceiling Showdown. Most of these ideas have been published on TradingView. You will find links to these stories at the end of this report. While there isn’t an option contract available on the CNH, short-term trade on the currency futures contract may be considered. Take the balloon incident as an example: Do you think Beijing will retaliate or merely protest in words? The former could worsen the US-China relations, and in my view, push the value of the Yuan down. The latter indicates the conflict can be managed without getting out of control, which is good news for the Yuan. In summary: • Hawkish response – Yuan value Down and CNH futures price Up; • Dovish response – Yuan value Up and CNH quote Down Once you form an educated opinion on which action is more likely, consider placing a long (hawkish) or short (dovish) futures position accordingly. Then hold on for the events to unravel. If history is any guide, the market often tends to over-shoot in response to overreaction. Happy trading. Disclaimers *Trade ideas cited above are for illustration only, as an integral part of a case study to demonstrate the fundamental concepts in risk management under the market scenarios being discussed. They shall not be construed as investment recommendations or advice. Nor are they used to promote any specific products, or services. CME Real-time Market Data help identify trade set-ups and express my market views. If you have futures in your trading portfolio, check out on CME Group data plans in TradingView that suit your trading needs www.tradingview.com
CME:CNH1!Long
by JimHuangChicago
1
Update on the Chinese YuanA few months ago, I proposed USDCNH/USDCNY consolidating for a bit and then going higher, as such strong moves usually follow through. The Chinese economy looks extremely weak for multiple reasons, and I see no way that the CNH/CNY won't lose much of its value relative to the dollar. Technically it is ready for another strong move higher, and the fact that Pelosi is visiting Taiwan could be the catalyst for a breakout. Of course, I could be wrong, and the market has a pullback first. However, I think that would be a buy-the-dip opportunity. Going down to 6.6 would be a gift, and that's where I'd want to add to my long positions (short CNY). In my opinion, the market will take out the double top at 7.2$ first, maybe pull back, and then move significantly higher. However, my first target is a bit lower because I do some resistance there, as there was a breakdown that was never retested. Regardless of what your target is, the R/R here is tremendous.
Long
by BitcoinMacro
1
USD/CNH: Bullish pennant pattern formed – Yuan to fall to 7.20?The US dollar-Chinese yuan pair ( USD/CNH ) has been trading on a bullish pennant pattern since April of this year, and is currently testing the critical 7.00 threshold, which corresponds to the close of July 2020 and 78.6% Fibonacci retracement level (2022 lows to May 2020 highs). Following the PBoC's decision to reduce Chinese domestic banks' forex reserve requirement ratio by 200 basis points to 6% beginning September 15, the 7.00 mark level may face some selling pressure from the bears. This policy action could in fact free up dollars to be converted into Chinese yuan to sustain the economic slowdown caused by the reinstatement of Covid-19 restrictions. The USD/CNH pullback may find support at 6.89 (1 September lows) or 6.85 (61.8% Fibonacci level). But if 7.00 is broken, then 7.20 might be next. This target (7.20) represents the height of the flagpole when added to the breakout point and will complete the Fibonacci retracement to the highs of May 2020. Idea written by Piero Cingari, forex and commodity analyst at Capital.com
by Capitalcom
Chinese yuan rebounds on Shanghai reopening hopesThe Chinese yuan rose to one-week highs on Monday, fueled by expectations that Shanghai, the country’s financial hub, will soon emerge from a two-month lockdown that has crippled economic activities in the city and weighed on the country’s overall economic recovery. The CNY traded at 0.1504 against the greenback on Monday, recovering further from an over one-week low of 0.1481 on Wednesday when the yuan weakened against a basket of 24 currencies tracked by the China Foreign Exchange Trade System (CFETS). Still, the yuan has fallen below the 0.1570-mark against the USD since April as concerns over China’s economic recovery grew following Shanghai’s prolonged lockdown that has affected consumption, industrial production, lending, foreign trade, and other aspects of the economy. The RSI indicator is at least suggesting that this recovery in the yuan may not last. Slowing economy China’s zero COVID-19 policy has definitely taken a toll on the domestic economy. In April, China’s retail sales fell at the sharpest pace in over two years as the lockdowns in Shanghai hammered consumption and the supply of retail goods. There have been reports of food shortage in Shanghai, with state-run Xinhua News reporting that multiple botanists called on residents to stop digging and consuming wild vegetables. Industrial output, meanwhile, unexpectedly fell in April versus a year earlier, reversing the modest gain in March. The drop in China’s factory output last month was the steepest since the height of the COVID-19 pandemic in February 2020. It came as lockdowns forced the closure of vital factories including those operated by local and domestic carmakers. Shanghai is one of China’s major auto production hubs and the lockdowns weighed on carmakers’ revenues in April. All-out effort to stimulate economy As investment banks and economists downgraded their outlook on the Chinese economy this year due to the lockdown’s impact, Beijing has vowed to all-out efforts to stabilize industrial and supply chains and boost infrastructure construction. On Friday, Chinese Premier Li Keqiang acknowledged that the country’s latest economic challenges are worse than those seen in 2020. Li said the government is "at a critical juncture in determining the economic trend of the whole year.” He urged local governments to make every effort in bringing the economy back to its normal track. Shanghai reopening The Shanghai government is working to ease the city’s lockdown, issuing on Sunday an action plan that consists of 50 policies and measures to help stimulate the economy. The measures include relaxing the rules on resuming production starting June 1 and expanding the scope of subsidies for companies’ pandemic prevention and disinfection, state-run Xinhua News reported Sunday.
by BlackBull_Markets
Yuan will devalue soon, US dollar $DXY will soar!Republishing this from my USDCNY post. 1. Head and Shoulders pattern 2. MA's + PA show a bottoming pattern 3. China will devalue the Yuan (Remnimbi) 4. Dollar $DXY will go over 106 5. Gold $XAUUSD will go below $1,500 oz. 6. Silvere $XAGUSD will go below $15 oz. Trade idea related to this currency pair that goes through other macro factors twitter.com 10, 20, 30 year yields mirror this PA - and show USD will be going up as yields are starting to. When China devalues the Yuan, the FED will be helpless to push it down unless they go all in on YCC via UBI. Then you'll want to pivot into $XAUUSD or $XAGUSD.
Long
by EmptyEternity
Chinese Yuan Has Completed The Bullish Setup To Move UpHey friends hope you are well and welcome to the new update from the forex market. The Chinese Yuan has completed the bullish setup and ready to move up against US Dollar. In today's article we will watch the different chart patterns and indicators that are giving signals for the bullish movement of an Chinese Yuan. A big falling wedge: On long term monthly chart the Chinese Yuan is moving in a falling wedg. And this is considered as a bullish reversal pattern among the traders community. As this is the long term monthly chart and signals and patterns are more firmed on long term charts, therefore there are more chances that it will follow the bullish reversal behavior of falling wedge. At this time the price line of Yuan is at the resistance of wedge. But this time it will be difficult for the priceline to drop up to the support of this wedge. Later this article you will see that strong reasons why the Chinese Yuan will not reach at the support. Down channel and synchronized movement with indicators and EMAs: On weekly chart the priceline can be seen moving within a down channel and the movement within this channel is very much synchronized with the stochastic and Momentum indicators. If you take a closer look at the chart then you will notice that whenever the price line reaches and the support and the stochastic gives bull cross and momentum starts turning bullish then price action takes bullish divergence and reaches up to the resistance of the channel. But this time the priceline of Yuan is almost at the center of the channel and Stochastic has entered in over sold zone and has given bull cross. And the momentum indicator is also changed from strong bearish to weak bearish. Therefore there are more chances that the price action will not move more down to reach the support of the channel. And if the Chinese Yuan will be moved up from here then the exponential moving average 10 can also cross up EMA 21 and this bull cross between the two exponential moving averages can lift the price action more up that can lead to the breakout from this channel. A double bottom formation is cancelling the bearish move of Head & Shoulder: On the weekly chart the price action has formed a Head and Shoulder pattern.The formation of this pattern was started from the September 2019. Now the priceline has crossed down the neckline of the shoulder and reached at $0.1395 support. Now the price action is likely to form a double bottom formation that can cancel the bearish rally that was started due to this H & S pattern. A harmonic BAT formation: On the same weekly chart the price action of Chinese Yuan has completed the formation of bullish BAT and entered in the potential reversal zone. Now we have seen that the different indicators on the weekly chart has given bullish signals and after formation of Head and Shoulder the priceline is likely to form a double bottom for bullish reversal and finally the price action has also formed a harmonic BAT pattern. And at this time it is in PRZ level. Therefore All indicators and patterns are giving strong signal that Chinese Yuan has completed the setup for bullish reversal. And it can start the bullish rally at any time. Conclusion: On the long term signals and patterns are in favor of bulls rather in favor of bears, however the stop loss is must. In this trade we can set the maximum extent of the potential reversal zone as our stop loss.
Long
by moon333
1
The Chinese Yuan Devaluation It appears that the Chinese Yuan is to devalue (much) more. Fundamentally, the Chinese governement is coming up with countermeasures to offset the effects of the SARS-CoV-2 virus outbreak; which has also disrupted global trade activities. Technically, the USDCNH chart is on the verge of a break out, with MACD and OBV poised for support. Target for USDCNH is 7.15 as marked out in the chart. Watch the daily chart for the soon to happen breakout...
by Auguraltrader
1
Is fear in Yuan driving Bitcoin Bull runs??As a result of the trade war and trumps latest tweet China is currently devaluing the yuan. It's now above 7yuan/usd. I imagine this might promt some chinese millionaires to want to buy BTC due to fear. I'm seeing some correlation in when there is fear in the Chinese Yuan through devaluation. Is this causing a Bitcoin bullrun? The circled section conflicts with this however some periods show strong correlation. The hypothesis is that wealthy Chinese nationals are seeing the devaluation of there currency and buying up large amounts of Gold and Bitcoin. This might be obvious to some people but I thought I'd share a chart
BITSTAMP:BTCUSDLong
by Trilithium
Tides May Turn for USDCNHJust minutes ago, Reuters reported that Lightheizer and Mnuchin are going to Bejing for talks. However, trade war detente is now not on the table until June. Trump threatens to keep tariffs on if China won't hold up their end of the deal on intellectual property. Honestly its not looking good. It is difficult to tell if this trend will continue to go negative and if Trump holds an all out assault in the trade war against everyone and anyone he can get his hands on. This may be the world we live in by the end of 2019. Who knows. But clearly, the talks are no longer going as well as we once thought and also let's keep in mind how Trump walked away from Kim Jong Un in Hanoi. This is what we are trending towards now which would be quite detrimental to markets in spite of Trump's desire for a deal which is quite strong and in spite of his sensitivity towards the stock markets which we also know he is quite sensitive to as well. However in the end, in order for these negotiations to go well Trump needs at least the idea that he can create a positive message at the end. That's the fundie picture. I'll much more briefly talk technicals. Overall, we are trending towards oversold with the USD even though the momentum is still trending in that direction. If you like my analysis, read some more words and check out some more charts here: www.anthonylaurence.wordpress.com
by WhiskeyTangoFoxtrot3
How could you have avoided the drop in the stock market?For many conspiracy theorists familiar with the cover of an edition of The Economist from 1988, the 10/10/2018 is significant for being the date when a new world currency will be ushered in. It seems instead the date that traditional stock markets come tumbling down, with DJI down 1,300 points over the past two days and many other stocks following suit. China's 100-basis-point cut to their reserve requirement ratio is likely to inject about 109B$ into their economy and could devaluate their currency, thereby allowing China to make goods and services cheaper compared to the US. This could be a sign of China struggling against the US's aggressive trade policies. Any rattling of their economic growth is likely to effect markets globally, as it's the largest developing economy at the moment. Not only this, but the Fed's decision to raise interest rates means that the rate of borrowing goes up which dips into the bottom line of companies that need to borrow to finance growth. Higher rates restrict economic growth. This has made investors wary of markets at the moment and could be seen as reasons for the decline in the market. Saying that, it's too early to know whether or not we're officially in a downturn. Anticipating, and acting, on this news is difficult and risky. It's hard to beat markets with this tactic. The big moves always happen after the fact, but the smaller movements in the markets beforehand create ripples and divergences that can be spotted quite easily with algorithms. -=Simplicity=- God Complex is one of those algorithms that anticipates big movements as opposed to reacting to them. The chart above details the last 10 months of price-action against the DJI and if we assume an initial 10k trading position and compound the returns, then these are the results. These trades are without leverage too. 1st trade: +9.3% / 10930$ 2nd trade: +5.73% / 11556$ 3rd trade: -0.46% / 11503$ 4th trade: +0.46% / 11555$ 5th trade: breakeven / 11555$ 6th trade: -1.22% / 11416$ 7th trade: -1.01% / 11302$ 8th trade: -0.88% / 11203$ 9th trade: +1.23% / 11341$ 10th trade: +0.65% / 11415$ 11th trade: -0.24% / 11388$ 12th trade: -0.9% / 11286$ 13th trade: +1.54% / 11460$ 14th trade: -0.94% / 11353$ 15th trade: +1.18% / 11487$ 16th trade: -0.44% / 11437$ 17th trade: +1.83% / 11646$ 18th trade: +4% / 12112$ That's a return of 21.12% with the biggest loss being recorded at -1.22%. If you had of bought and held, you would have made about 5%. Don't react to news. Act before it. --------------------------------------------------------------------------------- docs.google.com
DJ:DJI
by overttherainbow
3
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.
Long
by StefanBode
USD/CNY Analysis: Mid-TermTechnical Analysis i) Looks like a Cup and Handle formation for USD/CNY on the weekly chart. Looking to short play the Handle, looking for entries between 6.62 - 6.64 down to 6.48 level. ii) Our most likely scenario (1), will have a pullback from the Handle down to the 6.48 level from their should look for some long positions up to 6.8 level. *ii) However, as any good trader should know is that you shouldn't get married to a position or scenario. Therefore, for this scenario (2) at the 6.48 level instead of immedietaly closing position I advice that we re-assess the markets at that moment in time and see whether we should continue shorting down to 6.3 further easing into shorts on the ride down. **A1 is a copy/shadow of the Bars Pattern taken from A. Fundamental Analysis The strength of the US economy which led the Federal Reserve to raise interest rates this year in conjunction with Trump's Tariffs has led the Chinese Yuan to fall more than 3% again the dollar in the past two weeks as tensions between the two largest economies has escalated. Chinese companies have amassed huge leveles of US dollar debts in recent years through bond sales in Hong Kong, according to financial data provider Dealoagic. However, it seems that China has been preparing for the upcoming Trade War as Moody's Investors Service stated that 'll but five of the 49 rated South and Southeast Asian high-yield non-financial companies have protection in place against a significant rise in debt levels or borrowing costs, if their local currencies were to depreciate up to 15% against the US dollar. The 49 companies reported a combined US dollar debt total of $45.5 billion as of year-end 2017, or about 55% of their total outstanding debt'. We can expect a further depeciation in the Yuan which shouldn't be to alarming for investors as it could make China's huge export industry more competitive globally as it makes Chinese products cheaper for buyers who pay in dollars. For which Trump has in the past repeatedly accused China of manipulating its currency's value in order to acheive this.
Long
by MoneyBodySoul
CUP OF CHINESE COFFEE ANYONE?Probable nice CUP O´COFFEE Formation in the Yuan. Devaluation has been happeningin steps of 150pips. so this could be a long and paced devaluation (but pretty safe according to Macros). Macro Astro Mr. Kyle Bass has cited: KYLE BASS: 'We are facing the largest macro imbalance in global history' Rachael Levy 01 Jul 2016 6:58 PM 611 Kyle Bass. "We are facing the largest macro imbalance in global history." That's according to Kyle Bass, founder of hedge fund Hayman Capital Management. Investors better prepare for a Chinese crisis that will mimic what happened in the US mortgage crisis, Bass said in a Friday interview with Real Vision Television. "When I look at what's happening now in China, the amplitude of what's happening is two, three, or four times what happened in the US," he said. Here are Bass' main points: *The Chinese are going to have to accept a devaluation of the yuan. When the Chinese crisis hits, the Chinese are going to have to react similarly to the way central bankers did after the mortgage crisis. "They're going to expand the PBOC's balance sheet. They're going to slash the reserve requirement. They're going to drop the deposit rate to zero. They're going to do everything the US did in our crisis," he said. And it won't look good. "Every single thing the Chinese central bank has to do is currency negative for them." The takeaway? You better get ready. "In the next two years, this is happening. If you want to pretend that it's not going to happen, you're going to do poorly somewhere in your portfolio."
Long
by maguila057
BREXIT YUAN DEVALU: USDCNH - SNEAKY FX FIXING? SELL SPX & FTSEAt the start of 2016 the PBOC began aggressively devaluing the off-shore Yuan against the USD, imo in an attempt to start the year with a competitive export:import advantage - with the aim of making 2016 a headline "come back" year for China amid the growing GDP growth and Credit bubble worries. As a result Equities across the board sold-off (-8.5% in a few days) as non-chinese Exporters globally feared that their biggest market/ growth market was coming under pressure, as the relative value of their USD exports soared, as Chinese import demand would fall significantly and as a function of the depreciation relative to the USD. Whilst the initial highly correlated move hit equities by -8.5% (7 days), however when fully priced, the CNH devaluation fears took the SPX down 13% to 1808 lows in just 12 trading days. The PBOC Deval intervention took CNH to lows of 6.7550 and low-closes of 6.6900. Brexit - Under the radar and sneaky PBOC FX Intervention? 1. Fast forward 6 months - the Days going into Brexit USDCNH traded at almost exactly the same fix as the pre-deval January level at 6.58 (blue line), then on the most volatile brexit days, the 24th and 29th, PBOC fixed the Yuan 1000pips lower to 6.6850, just above the extreme January lows at 6.6900 - Since then CNH has continued drifting lower, and now has eclipsed the shock January low closes of 6.6900, currently at 6.6960, which is now a new 6 year low. - This begs the question, did the PBOC plan this as a way to get their goal of competitive depreciation achieved WITHOUT the negative press/ market impacts that were seen in January? The answer is unknown but by looking at the Yuan prices on brexit day and the day after, it certainly looks like it - 1000pip devaluation in 2 days, thats bigger than any deval in CNH's previous history (even from January). How to trade it? 1. Imo this trade is a no brainer, given the PBOC seem happy to keep fixing CNH higher and have shown no signs of stabilising/ appreciating - with the last 6 daily candles in the green, my bets are that the PBOC in the near-term think they have gotten away with the deval, in the midst of all of the brexit effects e.g. Central Bank information flows are high, the brexit news itself and general market volatility are all acting as distractions - thus the SPX hasnt priced any of this deval YET despite it being more extreme than what caused the 8-13% equities sell off in January? - I have to admit, it has taken even me until now to realise this sly depreciation, nonetheless this trade (short Equities) is a one up on the market currently as most still havent noticed and continue to focus on central bank action.
Short
by QuantumLogicTrading