Chinese Yuan (CN¥) Steady Against US Dollar ($) (CNYUSD)

Chinese Yuan (CN¥) Steady Against US Dollar ($) (CNYUSD)
Chinese Yuan (CN¥) Steady Against US Dollar ($) (CNYUSD)

China’s yuan was steady against the US dollar on Friday, with sentiment improving on firmer signals from the authorities and as investors trimmed bearish bets on the Chinese currency.

The People’s Bank of China set the midpoint rate at 6.8884 per US dollar prior to market open, firmer than the previous fix of 6.8957.

Friday’s fixing was around 50 pips stronger than some institutions’ models had suggested. Traders said Thursday’s fixing was also around 80 pips higher compared with their forecasts.

The stronger-than-expected guidance rates might have been a result of the midpoint fixing mechanism, traders said, which eliminates some of the highest and lowest quotes from contributors.

Overall,the bias in prices is: Sideways.

Short term: Prices are stalling.

Intermediate term: Prices are ranging.

By the way, prices are vulnerable to a correction towards 6.89.

The projected upper bound is: 6.92.

The projected lower bound is: 6.88.

The projected closing price is: 6.90.

Candlesticks

A big white candle occurred. This is generally considered bullish, as prices closed significantly higher than they opened. If the candle appears when prices are “low,” it may be the first sign of a bottom. If it occurs when prices are rebounding off of a support area (e.g., a moving average, trendline, or retracement level), the long white candle adds credibility to the support. Similarly, if the candle appears during a breakout above a resistance area, the long white candle adds credibility to the breakout.
During the past 10 bars, there have been 6 white candles and 3 black candles for a net of 3 white candles. During the past 50 bars, there have been 24 white candles and 23 black candles for a net of 1 white candles.

An engulfing bullish line occurred (where a white candle’s real body completely contains the previous black candle’s real body). The engulfing bullish pattern is bullish during a downtrend. It then signifies that the momentum may be shifting from the bears to the bulls.

If the engulfing bullish pattern occurs during an uptrend (which appears to be the case with FOREX CNY=), it may be a last engulfing top which indicates a top. The test to see if this is the case is if the next candle closes below the top of the current (white) candle’s real body.

Momentum Indicators

Momentum is a general term used to describe the speed at which prices move over a given time period. Generally, changes in momentum tend to lead to changes in prices. This expert shows the current values of four popular momentum indicators.

Stochastic Oscillator

One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 87.3992. This is an overbought reading. However, a signal is not generated until the Oscillator crosses below 80 The last signal was a buy 28 period(s) ago.

Relative Strength Index (RSI)

The RSI shows overbought (above 70) and oversold (below 30) areas. The current value of the RSI is 60.87. This is not a topping or bottoming area. A buy or sell signal is generated when the RSI moves out of an overbought/oversold area. The last signal was a sell 90 period(s) ago.
The RSI is between 70 and 30. Open trades should be closely monitored, but new trades should be avoided.

Commodity Channel Index (CCI)

The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is 130.This is an overbought reading. However, a signal isn’t generated until the indicator crosses below 100. The last signal was a sell 1 period(s) ago.

MACD

The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a buy 7 period(s) ago.

Rex Takasugi – TD Profile

FOREX CNY= closed up 0.006 at 6.902. Volume was 56% below average (consolidating) and Bollinger Bands were 58% narrower than normal.

Open      High      Low     Close     Volume
6.893     6.902    6.893    6.902   805

Technical Outlook
Short Term:                Overbought
Intermediate Term:  Bullish
Long Term:                 Bullish

Moving Averages:   10-period   50-period   200-period
Close:                        6.89             6.89             6.82
Volatility:                 1                   2                   3
Volume:                    1,566          2,216            2,224

Short-term traders should pay closer attention to buy/sell arrows while intermediate/long-term traders should place greater emphasis on the Bullish or Bearish trend reflected in the lower ribbon.

Summary

FOREX CNY= is currently 1.2% above its 200-period moving average and is in an upward trend. Volatility is relatively normal as compared to the average volatility over the last 10 periods. Our volume indicators reflect volume flowing into and out of CNY= at a relatively equal pace (neutral). Our trend forecasting oscillators are currently bullish on CNY= and have had this outlook for the last 3 periods.

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Shayne Heffernan Funds Manager at HEFFX holds a Ph.D. in Economics and brings with him over 25 years of trading experience in Asia and hands on experience in Venture Capital, he has been involved in several start ups that have seen market capitalization over $500m and 1 that reach a peak market cap of $15b. He has managed and overseen start ups in Mining, Shipping, Technology and Financial Services.

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