All information is for educational use only and is not investment advice. There is a substantial risk of loss in trading commodity futures, stocks, options and foreign exchange products. Past performance is not indicative of future results.
Here's a quick technical perspective what we are seeing with the USD/CNH currently. As usual, we will walk through our top down process looking for the path of least resistance and market context.
To start out, let's take a look at where we are from a pure Monthly bars and Weekly bars perspective to view the macro context. We can see that the market formed a balance area in the previous months. Actually the market broke out to the upside and trading above that balance area now. With the installed Fibonacci levels we can see that the market found support at the 50% and the 61.8% level to form the bracket area. Currently the market testing a potential resistance area but could heading toward to the next marked area in the new year.
With looking at weekly bars chart, we can identify a one time framing higher market that occurs since several weeks. Also the previous week's high got taken out from the current one. However, we can observe a rejection area with the previous bracket low that holds since two weeks.
With installed EMAs on this weekly timeframe we can see that a bullish short-term trend is intact currently.
Moving forward to the daily perspective we can identify some brackets and gaps. With yesterday's close and today's open the market actually broke this current balance area. As we know gaps are potential areas that could be revisit. The market opened and moved lower to revisit and fill that open gap. There is also one more potential gap lower to target. With today's close within the bracket a test of the balance area low is somewhat probable.
It looks like the stream of buying died up here and some guys took profit today. This could lead to more short selling to revisit the next gap. With a close below 6.2135 the likelihood to explore lower prices would be higher. Anyway, everything can happen. Let's stay focused and react to market generated informations.
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