As part of China’s move to create awareness of its digital Yuan, authorities in Shanghai is planning to distribute $3 million worth of the central bank-issued currency among residents of Shanghai in the form of a lottery. Coupled with the appearance of a , this development appears to give a level of cynosure for investors as I anticipate a risk of further decline for the USDCNH pair in the coming week(s).
Tendency: Downtrend ( )
Structure: | Channel | Breakdown | (AB = CD)
Observation: i. Since late March 2021, the price has been caught up within a as the Greenback experiences risk of further decline in the nearest future.
ii. As represented on the chart, connecting the lower highs and lower lows of price action with parallel reveals a downward trend that appears to hold following the Breakdown and retest of Y6.41000.
iii. Below the Key level @ Y6.39600 remains a yardstick for entry opportunity as I look forward to a transition into a (AB = CD) with parameters explained below;
a. Impulse A-to-B is expected to be in harmony with the potential C-to-D leg.
b. The B- to-C leg is currently at 61.8% (with the possibility of a 78.6%) of the A-to-B leg.
c. The C-to-D leg is expected to fall within 127.2 - 1.414% Fib. ext . of the A-to-B move @ Y6.32000 area.
Trading plan: SELL confirmation with a minimum potential profit of 550 pips.
Potential Duration: 4 to 8 days
NB: This speculation might be considered to make individual decisions on the lower timeframe.
Watch this space for updates as price action is been monitored.
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