USDCNY to Fall Towards the Lower End of the Accumulation
The USDCNY continues to find itself in a solid downtrend. This is illustrated by the ADX indicator, which has been threading above the 25-point benchmark since late September 2020.
The ADX reached a peak around the time the price action fell to the upper boundary of the last Accumulation range at 6.4700. Afterwards, the price went on to establish a false bullish rebound.
The latter materialised in a Dead Cat Bounce pattern, which typically represents a temporary break in the development of a broader downtrend. The pattern failed to strengthen above the 20-day MA (in red), which is why the USDCNY was then able to break down within the Accumulation range.
That is why the strength of the underlying Markdown - an essential component of the Wyckoff Cycle - appears to be waning down, as underpinned by the ADX indicator after February 2021.
This represents an early signal that the USDCNY is once again getting ready to consolidate in a new range. Before this can happen, however, the price action looks poised to fall to the Accumulation range's lower boundary at 6.2650 once again.
The ADX reached a peak around the time the price action fell to the upper boundary of the last Accumulation range at 6.4700. Afterwards, the price went on to establish a false bullish rebound.
The latter materialised in a Dead Cat Bounce pattern, which typically represents a temporary break in the development of a broader downtrend. The pattern failed to strengthen above the 20-day MA (in red), which is why the USDCNY was then able to break down within the Accumulation range.
That is why the strength of the underlying Markdown - an essential component of the Wyckoff Cycle - appears to be waning down, as underpinned by the ADX indicator after February 2021.
This represents an early signal that the USDCNY is once again getting ready to consolidate in a new range. Before this can happen, however, the price action looks poised to fall to the Accumulation range's lower boundary at 6.2650 once again.