USDCNH Technical Trade: Ripe for Gains

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USDCNH Technical Analysis

USDCNH suffered substantial losses for an extensive period of time. Based on our technical models USDCNH current levels may present the a technical opportunity to reload long trades into the FX markets.

Recent USDCNH dip on the daily chart may very well affirm the right-hand shoulder of reversed Head-And-Shoulders (H&S). From the chart the neckline and the levelling of the shoulders is unclear at the time of this writing. We recognize the potential of entering the trade at market price or placing  an entry order at a lower price, which would in return increase the expected Return on Investment (ROI) and marginally reduce the protective stop loss order.

USDCNH Daily Chart

Please click on the chart to enlarge:

USDCNG Daily Chart 27 August 2014

USDCNH Technical Analysis 27/08/14

After observing intraday time frames we decide to enter the trade at market price and possibly consider increasing the trade size at a lower price should the corrective weakness continue. From risk management perspective we are attaining a decent Risk-Ratio (RR) while not incurring a hefty interest over the swap rates.

USDCNH Technical Strategy

We are targeting the 100% objective of the reversal (6.1850) while placing our protective stop loss order beneath the lower diagonal line (in black). We believe outside market events will be the fundamental trigger for  the technical rally we are expecting from the cross.

We are aware local governments in China are crippled by mounting debts, forcing a new law which has yet to be approved that would allow local governments to borrow directly from the market in the form of municipal bonds.  To clarify, it is difficult for us to pinpoint the fundamental trigger so we place our faith in the technical side of global markets.

It is essential to highlight the spread of USDCNH is quite large and not as tight as other pairs and crosses in the FX markets. Do pay attention for the spread for USDCNH in your trading system. We invite you to observe our Trades Performance since we began issuing trade alerts and market research.

USDCNH Trade Details

Long @ market price (6.1493)
Take profit: 6.1850
Protective stop: 6.1400
Estimated duration: 24 days
Risk Ratio: 1 : 3 (approx.)

Updates regarding the trade will be posted at the bottom of this page.

27/08/14 UPDATE: USDCNH plunged lower in today’s session, trading at 6.1426 at the time of this writing. Based on our strategy, we are increasing the existing trade by 30% at market price while layering the protective stop loss order at 6.1394, targeting 6.1850. Please note we are also modifying the protective stop for the existing trade from 6.1400 to 6.1394.

28/08/14 UPDATE: As we anticipated, USDCNH spiked higher following the re-test of the daily support, trading at 6.1514 at the time of this writing.

Please click on the chart to enlarge:

USDCNH Technical Strategy

USDCNH Dailychart 28/08/14

We are closing 25% of the second long trade at market price and shift the protective stop to the entry.

01/09/14 UPDATE: Our second trade in USDCNH was stopped at the entry. We were able to liquidate 25% of the trade with a decent profit. We are currently holding one long trade in USDCNH that is below our entry. Our bullish outlook for the pair remains firm despite recent volatility. We are not increasing the trade size at the time of this writing.

USDCNH Technical Trade: Ripe for Gains
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USDCNH Technical Trade: Ripe for Gains

                                             USDCNH Technical Trade: Ripe for Gains

USDCNH Technical Trade: Ripe for Gains

Last Updated on August 9, 2015