close icon

USDCNH Looks Bearish in the Midst of a Trade War

Less than a month ago USDCNH rose to 6.9621 and it looked like reaching a new multi-year high above 7.0000 was only a matter of time. Unfortunately for the bulls the market chose otherwise.

USDCNH fell to 6.8164 on the last day of June. As of this writing, the pair is hovering around 6.8755 following a recovery to 6.9003 yesterday. In order to see what can be expected from now on, let’s take a look at the recent weakness through the prism of the Elliott Wave principle.

USDCNH draws an Elliott Wave impulse pattern

The hourly chart of USDCNH reveals that the drop from 6.9621 to 6.8164 is actually a clear five-wave impulse pattern. It is labeled 1-2-3-4-5 in wave (1/A), where the sub-waves of wave 3 are also visible.

This tells us two things: one, the recovery to 6.9003 must be part of the corresponding three-wave correction in wave (2/B); and two, once wave (2/B) is over, more weakness in wave (3/C) should be anticipated. The level beyond which this count will no longer be valid is the starting point of wave (1/A) at 6.9621.

The odds remain in the bears’ favor as long as USDCNH trades below this key level. Since wave (3/C) is supposed to exceed the bottom of wave (1/A), targets below 6.8164 make sense.

Do you trade Forex? Analyses of EURUSD, USDCAD and USDJPY are included in the Elliott Wave package our subscribers will receive on Sunday!



Stay informed with our newsletter

Latest Elliott Wave analysis on different topics delivered to you weekly.

Privacy policy
You may also like:

GBPUSD To Resume Uptrend Once Correction Ends

The Brexit saga continues as Boris Johnson’s re-election puts Britain firmly on the path of leaving the EU on January 31st 2020. And while the results of the June 2016 referendum caused a crash to 1.1650 by October 2016, GBPUSD is trading near 1.3100 today. The chart below reveals the structure of the recent recovery…

Read More »

GBPCAD Can Reach 1.9000 Before the Bears Return

GBPCAD bulls have been on a roll the past four months. The pair is currently trading above 1.7330, up 9.1% from its early-August low of 1.5875. And while the Forex market is not the place to rely on a trend for very long, it is not uncommon for GBPCAD to make large moves in either…

Read More »

EURAUD Impulse Pattern Keeps the Bulls in Charge

Twenty days ago, EURAUD managed to stop the bleeding and form a bottom at 1.5976. As of this writing the pair trades around 1.6250 after reaching 1.6324 on November 20th. Is the uptrend still in progress or should we prepare for the bears’ return? A look at EURAUD ‘s hourly chart through an Elliott Wave…

Read More »

EURUSD Turns Up Ahead of Brexit Talks Breakthrough

EURUSD is up by 260 pips since the beginning of October. The pair climbed from 1.0879 to 1.1140 in just 14 trading days. The rally appears to be fueled by optimism regarding a possible Brexit deal and the tentative “phase-one” agreement between the US and China. In our opinion, however, there is something more to…

Read More »

USDJPY Pattern Makes More Sense than Politics

The last two weeks were different like night and day for USDJPY traders. The pair fell from 108.47 to 106.48 during the first three days of October and eventually closed the week in negative territory. The last five trading days, on the other hand, told a much different story. Last week, USDJPY rose from 106.66…

Read More »

GBPAUD Elliott Wave Setup Supports the Bears

Between July 30th and August 26th, GBPAUD managed to recover from 1.7561 to 1.8337. Despite the no-deal Brexit prospects, the Australian dollar turned out to be even weaker than its British rival for almost a month. However, GBPAUD is down by roughly 400 pips since August 26th. Traders are probably wondering if this is a…

Read More »

EURUSD Absorbs Economic, Trade War and G-7 News

EURUSD made a new low last week. The pair fell to as low as 1.0963 on Friday adding to the downtrend it has been trading in since February 2018. The last time the European currency traded this low against the greenback was in May 2017. The last few months have been characterized by new lows,…

Read More »

More analyses