Predictive/Forecasting Model eyes the following targets:
1 - TG-Hi = 6.5473 - 04 JUN 2015
2 - TG-Hix = 6.6721 - 04 JUN 2015
A break > Point-3 of the background geometry would still see significant resistance to any advance, with a / Geo . potentially illustrating the change of a push back. If this occurred at Point-5, then a temporizing decline could occur down along the 1-4 Line. However, based on Geo's Off-Set Rule, a rallying significantly above Point-5 (exacting Point-5') would likely limit such pull back to the level of price Point-4 (circa 6.187).
Note the dominant lines throughout the chart, which form significant dynamic price-pacing supports and resistance. These are likely to play a role in the nascent geometry, as well as subsequent price advances.
Bulls have defended their territory at the 6.187 level. This level may be temporarily violated, but invalidation of above analysis should come if and once price breaks-below/closes below Point-2 of the geometry, circa 6.1100.
Predictive Analysis & Forecasting
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From Ashraf Laidi - http://ashraflaidi.com/forex-news/china-fx-reserves-cny-implications
Here is a similar chart, wherein the off-shore $USDCNH is expressed in relative strength against the domestic $USDCNY:
1 - The CNH vs. CNY is expected to fall, suggesting a relative weakening of the off-shore currency (i.e.: decline in the CNH/CNY expression) BEFORE a weakening of the on-shore USDCNY (i.e.: rallying in the CNH vs. CNY chart) - This would reflect a lagging "catch-up" delayed method of the CNY relative to its CNH counter-part, as PBOC may use the CNH currency to "test the waters" before righting its own internal CNY ship.
2 - Fibonacci target at 0.618 is the most in-line with lowest Qual-Target "TG-Lox = 1.01137- 07 SEP 2015"
3 - Background geometry of Geo complies with initial internal constructs, such as its 1-2 Leg with reciprocal symmetry, as well as a complex 2-3 Leg Elliott Wave ZZ formation. The 3-4 Leg is expected to form a simpler ZZ pattern.
Originally, Ashraf Laidi (twitter handle = @alaidi) posted the relative strength expression of the off-shore yuan ($CNH) against the on-shore yuan ($CNY), I decided to pass the chart ($USDCNH/$USDCNY) through the Predictive/Forecasting Model, and quite a lot of relevant information came through.
The importance of this exercise is merely to detect or forecast the probable level at which the PBOC is likely to intervene against a dominantly bearish $CNH (think of "H" in CNH versus CNY as "H"ongKong, as the off-shore valuation of the Yuan, perhaps this mnemonic might help distinguish the two). In the most uneducated explication, the off-shore value of the yuan could be used by mainland China as a "tactical feeler", or a way to "test the waters outside of its 'great walls'" and thus be able to foresee an amenable intervention, based on the extent to which the value of CNH distorts relative to the domestic CNY - Not a bad way of managing a currency if you ask me, and this would be very much in tune with the Chinese strategy to change only by incremental means, here with the foresight of yuan valuation through a relative proxie, so to speak.
Nonetheless, if the distortion is too great, the CNY will have to play catch-up, and this means that too weak a pronouncement in the CNH is likely to call a lock-step adjustment in the CNY, which in the CNH versus CNY expression would simply give strength to the pair, as CNY would weaken as it adjusts to the weaker value of the CNH "feeler".
So, looking a the chart, one might anticipate that this intervention would occur along the lines offered by the Fibonacci levels, even as far down as the 0.786-Fib level, since the 2-4 Line off of Point-1 ("Tolerance Line") would still not be touched, and therefore, this would leave the Geo intact:
The Predictive/Forecasting Model target remains valid, and perhaps we will witness a validation at the alignment of that Model's target and the lower 0.786-Fib level.
Of course, as I write a piece on the CNH/CNY chart and offer a possible projection into the lower targets, price just bounced up, then down - Not in such an erratic way as to invalidate the entire forecast. In fact, the forecast is now adjusted at the TG-Lox level, a much more attainable feast.
$USDCNY stomped at Nodule's Core
We have nt gone into too much deth with nodes, nodules, nodal and nodular cores. However, suffices to say that these discreet geometries have the tendencies to define new and future pivot levels, especially at levels where no prior rice has ever wandered. This is an important feature - especially nodules, as they have a size requirement that distinguish them from nodes - of nodules, as they will help the trader consider future PROBABLE (not just possible) pivot levels, resistance/support, and shallow reversal (i.e.: retracements typically in the Fibonacci order the 0.386 to 0.618) levels.
At this point, we will continue to give greater consideration to the Off vs. On-shore relative strength chart, as posted earlier today.