USD/CNY surges following China’s devaluation

Following China’s devaluation on Tuesday of the yuan, the U.S. dollar/Chinese yuan currency pair (USD/CNY) has surged, reaching as high as 6.4485 so far today (Wednesday). It has now reached the most overbought level on a weekly basis since 2001 (based on weekly 14-period Relative Strength Index (RSI) momentum indicator), and is extremely overbought based on the daily chart, getting close to the maximum reading of 100.

The USD/CNY has now reached a relatively large potential resistance zone, from approximately 6.4379 to 6.4770. That potential resistance zone is derived from multiple Fibonacci analysis measurements, and a measured move that is double the first leg up off the January 2014 bottom.

About the Author
Bruce Powers, CMT, has over 20 years experience in the financial markets. Previously, he was President at WideVision, a Dubai based FinTech and IT services company, which published, and where he also was Chief Technical Analyst. For the past eight years Bruce has written a weekly column on the UAE stock markets titled \'On the Line\' for the Gulf News newspaper, and has appeared numerous times as a guest on TV business shows. Bruce is a Chartered Market Technician (CMT) and until recently served as Co-Chair of the CMT Association Dubai chapter, which he Co-founded.

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