FOREX: USD FIRM AGAINST THE CHINESE YUAN

The market has shown virtually no net gain or loss during the past week (to time of writing).

No significant resistance or support levels have been touched by price action.

The rise of the MACD does not necessarily imply bullish movement in the market. It commonly returns to it’s “O” level when the market is trading in a tight range.

The Bollinger Bands may carry more significance than some of the other indicators, in this case. As the bands converge, drawing closer together, there is less volatility in the market. Eventually volatility will return and the bands may expand rapidly, as the did on Dec. 1/08.

A move to resistance around R1 may occur first, most likely to be followed by a move to test S1, and possibly lower.


Daily USD/CNY chart as at 22 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

The main resistance and support levels have remained unchanged from last week.
R1 – 6.8500
S1-6.8029
R2 – 6.7700

****

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.