In the midst of trade tension will China slow the fall in the yuan?
The offshore yuan has been moving lower (higher USDCNH) since bottoming most recently in mid-April. The run higher has the price moving closer to the end of October high at 6.9802. Before that high are swing highs (see green numbered circles) at 6.95768. Those are the upside targets more upside momentum.
The recent high (from Friday) reached to 6.9486. Today's high reached 6.9479 - a few pips lower than the Friday high. There is a bit of a stall, but will the Chinese let a stall happen with the trade tensions seemingly more intense? HMMMMMM.....We will see.
Looking at the hourly chart below, the pair is testing a lower trend line connecting lows going back to May 8th. That trend line cuts across at 6.9376. The price is just above that line at 6.9386.
A move below is the first indication that the buying is losing some of the upside momentum. Below that, is the 100 hour MA at 6.92283 (and moving higher). That in turn, is near the low from today at 6.9236. Below that will target 6.9187 (old highs - see red circle) and finally old topside and lower trend lines at 6.9136 will be eyed. Those are the downside corrective steps.
A correction could be in the making, although unless there is some more cooperation between US and China, and a sign of peace from China in the form of strenghening their currency, it would seem the upside is still the path of least resistance (a move lower would be the harder lift for traders). The first step is to get below the trend line form by the green numbered circles. Get below that level, and sellers have their first "win" over buyers in a while.
