USDCNY, Daily

Beyond recent changes in monetary policy, the yuan has received some support from news that major Chinese banks have been actively selling dollars to try to support the currency. The market is waiting for further details on the fiscal stimulus announced last month.

The 38.2% weekly Fibonacci retracement around ¥7.11 seems likely to hold as a short-term support in the next few days unless significant news reaches markets or there’s further clear strengthening by yields from American bonds. The bounce from below ¥7 at the end of last month was quite vigorous and supported by volume; this would usually suggest the possibility of an ongoing uptrend. The golden cross of the 20 SMA above the 50 from Bands came with a fairly high angle.

Now that there’s some evidence of buying saturation, though, further immediate gains seem less clear. It’s still a fair way to go to reach the 23.6% Fibonacci retracement and the 100 and 200 SMAs are likely to be dynamic resistances to some extent before that. Consolidation seems to be possible ahead of American GDP on 30 October, but beyond that ongoing gains seem possible if the data support them.