darcsherry

USDCNH | Perspective for the new week | Follow-up details

Short
FX:USDCNH   U.S. Dollar/Chinese Yuan
Even though we held on to a 400pips move in our direction since my last publication on this pair; a sudden breakdown of Channel and Trendline coupled with the appearance of a Head & Shoulder pattern (see previous publication in the link below for reference purposes) insinuates a bearish momentum is imminent.
Further consolidation amidst a mixed outlook remains the perspective of the market in the last couple of months and the momentum garnered by the buyers (correction phase) appears to be thinning out as the successful breakdown of Bullish Trendline insinuates a risk of further decline for the Greenback in the coming week(s).

Tendency: Downtrend ( Bearish )
Structure: Breakdown | Trendline | Reversal pattern (Head & Shoulder/ 61.8% retracement )
Observation: i. The Bearish Impulse which started in April 2021 went through a correction phase in the last 3 months to culminate @ CNY6.5300 area - an area that coincides with a 61.8% retracement of AB Leg.
ii. The appearance of a baseline with three peaks, where the outside two are close in height and the middle is highest reveals a Head & Shoulders pattern describing a formation that predicts a bullish-to-bearish trend reversal.
iii. During the course of last week trading session, we witnessed a significant rejection of CNY6.51000 level (2nd Head) which led to a confluence characterized by a breakdown of both Trendline and Key level @ CNY6.48500 hereby inciting a Bearish potential for me.
iv. In as much as I am comfortable taking a sell position anywhere below my Key level, the degree of accuracy to this bias is expected to be confirmed once the price breaks down the Neckline @ CNY6.45000.
v. A further breakdown of the Neckline might transpose into a Harmonic pattern (AB = CD) with extensions of CD leg aiming at CNY6.28000 area (127.2%) and a window to add to our existing position at Breakdown/Retest of CNY6.42000... Trade consciously!😊
Trading plan: SELL confirmation with a minimum potential profit of 750 pips.
Risk/Reward: 1:6
Potential Duration: 7 to 14days

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.


Risk Disclaimer:
Margin trading in the foreign exchange market (including commodity trading, CFDs, stocks etc.) has a high risk and is not suitable for all investors. The content of this speculation (including all data) is organized and published by me for the sole purpose of education and assistance in making independent investment decisions. All information herein is for your reference only and I take no responsibility.
You are hereby advised to carefully consider your investment experience, financial situation, investment objective, risk tolerance level, and consult your independent financial adviser as to the suitability of your situation prior to making any investment.
I do not guarantee its accuracy and is not liable for any loss or damage which may result directly or indirectly from such content or the receipt of any instruction or notification therewith.
Past performance is not necessarily indicative of future results.

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