Chart of the day: Dollar bulls are back

Earlier this year the offshore yuan was trading at a premium to the domestic one. The differential, though relatively small, has now disappeared and both are trading at 6.9065 to the US dollar; this is possibly linked to subdued volatility so far this year. Interestingly volume has picked up considerably since mid-March, hinting that the market is poised to trade through last month’s high at 6.92 because momentum has turned bullish again. Worth noting too that the lagging line has been supported by the candles of 26 days ago since mid-January. Therefore we feel that traders and investors should prepare for a retest of last year’s high point at 6.96. Above here on a first attempt is considered unlikely.

Nicole Elliott is a technical analyst