FOREX: US Dollar Gaps Up Against the Chinese Yuan

On December 1st, 2008, this currency pair gapped up and closed near it’s high, the highest close in nearly six months. Since then the market has moved down into the gap.

If the market moves farther into the gap, below S1, and closes below 6.8290, we can expect that a resumption of the down trend will soon follow. 6.8290 is the critical level.


USD/CNY chart as at 11 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

Li’s Sandwich Indicator – price has returned to within the bands and is no longer in it’s overbought condition.
Stochastic – falling sharply from the overbought level.
MACD – turning down but not yet “crossed”, and still in positive territory.

R1 – resistance at 6.8810
R2 – 6.9240
S1- 6.8390
S1- 6.7480

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Article and Commentary by Don Schellenberg. A trader and trading coach, he is a noted expert on Market Structure, Elliott Wave and Fibonacci. He trades the forex market.

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