Keep an eye on the yuan
Having comfortably met our downside targets at the mid-March low (6.4595) and 50 per cent retracement level (6.4550) consolidation took place as expected and we feel that a new interim base might be forming. While we cannot rule out an extension to 6.4225, a Fibonacci 61 per cent retracement, because the drop is an A, B, C-type move where C is the same height as A, the correction lower might be complete. Moving averages are close to crossing to bullish; the lagging line might find support at the bottom of the Ichimoku cloud of 26 days ago. A break into the gently downward sloping daily cloud this week suggests a burst above its upper edge.
Nicole Elliott is a technical analyst