FOREX: USD/CNY IN A CORRECTION OF A LONG TERM DOWN TREND

Last week this currency pair had a one day spike down to support near S1 on the chart, but quickly rebounded upwards.

The price pattern implies that a rise to or near resistance at 6.8500 is still possible, but that would be merely corrective action, as the long term trend is still down.

The market moved primarily sideways during the past week. This may continue for awhile until some significant news or event can jolt the market in one direction or the other.


Daily USD/CNY chart as at 15 January 2009 using NextVIEW Advisor. Click on chart for larger view.

TECHNICALS

MACD – in negative territory and moving sideways
Ichimoku Kinko Hyo – the “cloud”, the vertical lines in the chart, are supposed to indicate resistance or support for the market. The fact that the currency value is in the middle certainly indicates indecision or weakness, or both.

R1 – 6.8500
S1- 6.8029 – no change from last week’s support level.
S2 – 6.7700

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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.