CNH
Is the market complacent, asleep, greedy or wise?Not sure what's going on here but you would think stocks wouldn't be at the level they are now.
Ominous CNH-SPX Divergence The Chinese Yuan has quietly moved to multi-year lows with seemingly little fanfare. The growing stress within Chian's over-leveraged banking system, and continued capital flight (www.wsj.com) suggests the pressure on China's currency will continue. The last two times the currency weakened significantly were August 2015 and January-February 2016- not good times for the S&P 500. With China obtaining entrance into the IMF SDR Basket, there's less reason for the authorities to prop up the currency. Could be important to watch going forward.
Dollar Yuan Short OpportunityDollar Yuan formed a nice double top during the month of July confirming the substantial bearish macd divergence we're seeing on the daily.
After forming our high at the double top we dropped down to support forming a lower low, and have now pulled back to the .5 and .618 fib retrace, forming a lower high along with a beautiful right shoulder within the daily H&S formation.
My first target sits around the monthly fib retrace area and daily 200/250 ema's. My guess is we bounce off of that area forming a lower low, and then pullback to the 6.62500 area to retest the neckline/weekly fib/daily 50/60 ema's.
This appears to be one of the cleanest dollar crosses right now and should be a smooth and lucrative trade.
USDCNH Approaching resistance lvlPair is reaching a resistance level. I'm playing the area to catch a bounce or pivot level. Depends how price reacts off level. If area break, I'll be looking for the pair to head higher.
USDCNH: Weekly short setup, long the laggardUSDCNH is a very interesting pair right now.
In this chart you can see a few instruments, pitted against each other.
Currently, talking currencies, the offshore yuan is lagging the group, compared to the other dollar pairs on chart, and it happens to have a weekly time at mode downtrend signal, which confirmed last week on close, which gives us targets of 6.37 and 6.28, with a possibility based on the monthly, of hitting 6.05 in the long term.
Keep a wide stop loss if you take this trade, I'd reccomend 1 to 3 ATR for the stop, and short at market.
As a sidenote, you can also see that Palladium and Copper are lagging the group. Now, this could mean that on a relative strength basis, the Yen, Canadian dollar and gold, are safer investments, but it also implies they have already moved a lot, and they might not have as much room up, compared to CNH, EUR, AUD, Copper or Palladium.
I'm willing to wager on the latter being true.
Keep risk reasonable, and good luck if you take this trade.
Cheers,
Ivan Labrie.
$USDCNH Bearish Wolfe Wave: 60 MinHello Traders,
Following the theme of this weeks chart. Here is another Wolfe Wave that is underway on the hourly time frame in the US Dollar Chinese Yuan Pair. Look for an exit at the 1-4 Line
JPYCNH Gartley formation, enter now or wait - up to youI think that either one of the two price movements are completely viable.
The blue line is the 0.786 and 1.272 confluence region, so if you want to enter based on the confluence then short this now since it has already reached this area a few days ago.
Alternatively, if you would prefer to rely on the market meeting the 0.786 retracement as an entrance point, short at 0.058403. I personally will wait until the market meets the blue region again.
I have extended my usual profit target due to the market trading a range in a consolidation area at the moment.
How To Track The arbitrage Opportunities On Chinese YUANHere The Pretty Nice Setup To Hunt The Arbitrage Opportunities On Chinese YUAN.
ARE ASIAN CURRENCY GIANTS TOO FAR APART?China and Japan may be the economic giants of Asia and the world, but the behavior of their currencies would indicate otherwise.
Since August 2012, the Chinese yuan strengthened and the Japanese yen weakened considerably. The yuan trades at record highs against the yen. Given the negative impact of a strong currency on exports, China should seek to weaken its yuan against its neighbor’s yen.
Since the Chinese yuan was allowed more freedom to move in 2010, it has essentially strengthened against the U.S. dollar. There was pressure from the U.S. to allow the yuan to reflect the economic strength of the Chinese economy.
The yuan’s strength, which is shown on the chart as weakness of the U.S. dollar against the yuan, came to an end in January 2013. But the recovery of the dollar/yuan noticeably lagged the rally of dollar/yen.
Japan had never been squeamish about loving an export-boosting and deflation-fighting weak yen. So traders didn’t really pay much attention to Japanese Prime Minister Shinzo Abe’s apparent concern about the negative economic impact of the currency’s recent weakness.
The yen is now trading at an over six-year low against the dollar. While the two economic giants might have different fundamentals on their agendas, the reality says that weak currencies are needed for exports.
The cross between the Chinese yuan and the Japanese yen is trading at 17.77. The two components should converge, with the yuan weaker and yen stronger. However, only a convincing close below the 21-week exponential moving average, currently at 16.95, would signal that this FX re-convergence is actually under way.
