Yuan slumps through the cloud
It’s interesting to see how mainland China’s currency has been hugging the Ichimoku cloud. Pushing it up towards 6.5600 in February, it then proceeded to act as resistance, causing March’s slide to Fibonacci 38 retracement support at 6.4880. Once again February’s low point has itself acted as support, combined with the lower edge of the cloud and the retracement level. Over the coming week we would expect another attempt at a bounce towards the top of the cloud. However, note that by March this gets very thin and therefore there is a stronger chance of a turn in the trend – which since the end of 2014 has been for a weaker yuan against the US dollar.
Nicole Elliott is a technical analyst