China’s yuan firmed against the US dollar on Monday, buoyed by a stronger central bank guidance, but traders said further gains were likely to be restrained by corporate dollar demand this week.
Prior to market opening, the People’s Bank of China set the yuan midpoint at 6.7410 per dollar, the highest since Oct. 20 2016, reflecting the dollar’s broad weakness.
Monday’s official guidance was 5 pips firmer than Friday’s fix at 6.7415 per dollar.
The spot market opened at 6.7610 per dollar and was changing hands at 6.7618 at midday, 43 pips firmer than the previous late session close but 0.31 per cent weaker than the midpoint.
The yuan gained around 0.1 per cent against the dollar last week, but on a trade-weighted basis against a basket of currencies of its trading partners, it edged down 0.5 per cent to 92.91 from 93.34 a week earlier, according to official data from the China Foreign Exchange Trade System (CFETS).
The Thomson Reuters/HKEX Global CNH index, which tracks the offshore yuan against a basket of currencies on a daily basis, stood at 93.63, weaker than the previous day’s 93.72. The global dollar index rose to 93.888 from the previous close of 93.858. The offshore yuan was trading 0.06 per cent firmer than the onshore spot at 6.7577 per dollar. Offshore one-year non-deliverable forwards contracts (NDFs), considered the best available proxy for forward-looking market expectations of the yuan’s value, traded at 6.8945, 2.23 per cent weaker than the midpoint.
One-year NDFs are settled against the midpoint, not the spot rate.
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 6.81.
The projected upper bound is: 6.78.
The projected lower bound is: 6.71.
The projected closing price is: 6.75.
A big black candle occurred. This is bearish, as prices closed significantly lower than they opened. If the candle appears when prices are “high,” it may be the first sign of a top. If it occurs when prices are confronting an overhead resistance area (e.g., a moving average, trendline, or price resistance level), the long black candle adds credibility to the resistance. Similarly, if the candle appears as prices break below a support area, the long black candle confirms the failure of the support area.
During the past 10 bars, there have been 3 white candles and 7 black candles for a net of 4 black candles. During the past 50 bars, there have been 25 white candles and 23 black candles for a net of 2 white candles.
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.
One method of interpreting the Stochastic Oscillator is looking for overbought areas (above 80) and oversold areas (below 20). The Stochastic Oscillator is 46.1471. This is not an overbought or oversold reading. The last signal was a buy 2 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 31.97. 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 buy 2 period(s) ago.
Commodity Channel Index (CCI)
The CCI shows overbought (above 100) and oversold (below -100) areas. The current value of the CCI is -91. This is not a topping or bottoming area. The last signal was a buy 2 period(s) ago.
The Moving Average Convergence/Divergence indicator (MACD) gives signals when it crosses its 9 period signal line. The last signal was a sell 6 period(s) ago.
Rex Takasugi – TD Profile
FOREX CNY= closed down -0.018 at 6.749. Volume was 1% above average (neutral) and Bollinger Bands were 24% wider than normal.
Open High Low Close Volume
6.766 6.766 6.748 6.749 2,388
Short Term: Neutral
Intermediate Term: Bearish
Long Term: Bearish
Moving Averages: 10-period 50-period 200-period
Close: 6.77 6.81 6.86
Volatility: 3 3 3
Volume: 1,844 2,358 2,157
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.
FOREX CNY= is currently 1.6% below its 200-period moving average and is in an downward trend. Volatility is high as compared to the average volatility over the last 10 periods. Our volume indicators reflect moderate flows of volume out of CNY= (mildly bearish). Our trend forecasting oscillators are currently bearish on CNY= and have had this outlook for the last 5 periods.
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