We’re inclined to view the small upward notch between January 25th and March 29th as a wave “E” of wave B’s triangle. Triangles (i.e. the sentiment that they record), whether or not noticeably, essentially propel all market movement. In this pair, as the configuration looks right now, it suggests a thrust upward to near 8 kuai per dollar in a fairly straight rally before turning down again toward a lower target that further strengthens the RMB.
*With all of the artificial rate setting that occurred early on in the history of the yuan before it was allowed to float freely, we have some difficulty deciding whether its true destined direction is up or down. Although we have an apparent 5-wave sequence up since the 1980s, we also have a 5-wave sequence down after that. At this point, we’ll assume the downward impulse was a wave A of an ABC correction. Either way, after this high, more downside action should be expected.
We see a similar juncture in GBPUSD , EURUSD and EURGBP , all suggesting a rather imminent reversal in favor of the dollar. From the price patterns alone, we suspect something may happen particularly involving the U.K. that has a global domino effect that leaves people scrambling for dollar liquidity. Whether that might be the cry for Scottish independence or the fact that Charles is actually in league with the “You will own nothing and be happy” psychos, it’s anyone’s guess.