Yuan chases offshore cousin
Being half a step behind moves in its offshore cousin, the yuan’s exchange rate to the US dollar rallied last week, as we predicted earlier this month. In the process, historical volatility and volume have dropped back to their long-term averages, suggesting, along with other indicators, an element of “catch-up” for this exchange rate. Almost overbought on the RSI on Friday, with bullish momentum and the MACD dipping (known as “divergence” with price action), we feel we are likely to consolidate around the 6.56 level this week . After that, because long-term moving averages are bullish, we would expect this year’s high and the psychological 6.60 level to act as a magnet.
Nicole Elliott is a technical analyst