The biggest conversation in the trading committee today is China devaluing the Yuan last night. Let’s look at the chart and see what is really going on instead of listening to the news.
Below is a weekly chart provided by eSignal. The chart shows the relationship between the Chinese Yuan to the US Dollar. If price goes up, it means the US Dollar got strong against the Chinese Yuan. The inverse relationship also applies.
July 23, 2012, the USDCNH topped out at around 6.38107. From that point, the Chinese CNH got stronger against the US Dollar until Feb 3, 2014. At that point, we hit the bottom and the USD started to get stronger again. March 16, 2015, we had a big drop in price that stabilized around the support of 6.20237. Price decided to consolidate upward until last night. There was a high probability of the USDCNH retesting the previous pivot high of 6.30000 with a minor resistance of 6.24420.
In one day, we retested the previous pivot high and went back to retest major resistance of 6.38107. We have not broken it yet! It will be interesting to see what if we break this resistance to go higher or hold it.
NOTE: This action influenced the other currencies in the region too.
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