FOREX: USD/CNY - Likelihood of Another Brief Rally

For the last two weeks this currency pair has been inching downwards. Last week it finally touched our previous zone of support and reacted upwards weakly for two days before penetrating farther into support.

There is a likelihood of another brief rally before price settles below current support at 6.8028. The rally, if it occurs, should not exceed 8.6850.

The longer term trend is down. Once the low of 6.8028 is broken, a test of the previous low at 6.7480 will only be a matter of time.


USD/CNY chart as at 18 December 2008 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

200 Day Moving Average (200MA) – the brief rally in early December stopped directly at the 200 day declining MA.
Stochastic – oversold
RSI – closely reflecting the downward slope of the market
R1 – 6.8343
R2- 6.8737
S1 – 6.8032
S2-6.7480

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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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