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Chart Book | Chart of the day: Yuan-dollar rate bottoming out
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Why you can trust SCMP
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The onshore yuan reached our target of 6.32 per US dollar rather sooner than expected, with the offshore exchange rate keeping neck and neck with it (the differential now nil). Observed volatility on both has increased considerably since mid-December to some of the highest levels in six months. Over the past three weeks, volume in the offshore yuan has been excellent, adding weight to our view that the market is in the process of forming a double bottom against 6.27 – or a rounded base. With the dollar being oversold and momentum extremely bearish, this is no longer the case now. Daily and weekly closes above 6.3865 will complete an interim base, allowing the dollar to rally to the 6.4725 area.
Nicole Elliott is a technical analyst
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After graduating from the London School of Economics, Nicole started her banking career in London in 1982. Whether in trading, sales or an advisory capacity technical analysis has been the bedrock of her methodology. She has a wealth of markets experience including foreign exchange, money market, fixed income, stock indices, derivatives and commodities. She has spoken extensively on the subject, at conferences, to the press and on television, covering both market views and also teaching Technical Analysis. She is a published author and a recognized expert on Ichimoku Cloud charts.
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