China warning banks not to short CNY?

I have come across this Taiwanese discussion forum 年代向钱看 on youtube.com quite a while ago, partially due to my interest in Hong Kong's event during 2019. It has in depth discussion on  China and one of the guest is actually quite reputed on his knowledge of Chinese political arena. 

I have moved on to other forums until last week when I saw this picture on their video promotion. The picture showed a title " Beijing warning banks! Don't short CNY!" It got me curious, what is happening to CNY? 

For a while, I have considered CNY as a regulated currency. It was only until recently on my article The complexity of Hong Kong Dollars (HKD) - personal thought that I realized that CNY is one of the most traded currency presently ( ranked 8th in traded currency ).

Unfortunately the video did not include the discussion on what had happened. Even so, it made me curious about the currency.

Fig 1. Complete historical monthly chart on USDCNY available on yahoo.com

I attach this chart as it shows when CNY began its unpeg from USD, which is during the mid of 2005. I can recall at that time that USA was calling out China for artificially controlling its currency to ensure a very low exchange rate. This was to make China artificially cheap in everything.

I was temperorily located to Dong Guan China for half a year during 1998, I still remember that for a meager RMB100 ( USD12 ), I was able to treat a group of 10 person to a sumptuous dinner with fish, chicken and meat, if taken else where, it would have cost at least USD100, it was very cheap indeed.

True enough, CNY continued to rise against USD since it "unpeg" ( I still believe that the Chinese government control their currency to some extend ), reaching a level of RMI6.03 to USD1.00 by 2013. Since then, CNY hovers between RMB6.00+ to RMB7.00 per USD, I believe this oscillating range of CNY.

Interesting enough, it started to weaken, it is also during this period that I started receiving new of factory shut down and unemployment within their economic zone, Xi JinPing became the president of Chinese government.

Fig 2. USDCNY (CNY=) Weekly Chart ( Zoomed in )

Fig 2 shows a more recent development in CNY. I have included some technical analysis including the mirror image, the double top versus double bottom. In fact, based on the double bottom measurement, CNY has reached its minimum objective, corrected back to 8-week moving average and on continuation thereafter.

So where is CNY heading? 

The correction seems to form a pennant, using projection measurement, next level of resistance is between 6.948 to 7.144.

Why am I interested in CNY? because it was only as recent as last week that China lowered its interest rate and increased the money supply to the market. Yet, if what the picture of the discussion forum has shown is true, isn't the government contradicting itself? 

To be frank, I am sure that China is in a lot of trouble now, the property crisis leading to banking issue and government short of cash. Just recently there was another forum that mentioned certain city in China issuing fines to its citizens so much so that some citizens went to the police station to ask them to issue a monthly statement and payment to be made on monthly basis.

Above that, the climate is not helping, with heat wave and serious drought in progress causing water shortage. In the process affecting electricity generation by the hydro-plants. 

This causes electricity shortage throughout China, Shanghai has to switch of its nightlight display and the whole city went into darkness. 

Worse yet, people are advised to stop turning on the air-con while factories are on ration as there is not enough electricity to go around. 

To me it is a serious mismanagement of the country, so what is Xi doing? maintaining lock down to clear Covid-19 while other countries are all opening up. He is either an idiot without a hawk eye view of the country or he is very afraid that if he would be over thrown should lock down ends.

After all, lock downs are easiest way to limit citizens' mobility, as demonstrated by how the local government turning the health code yellow, which stop the people from taking any public transport and protest against the banks. 

I understand Chinese government's intention to relax interest rate. They need the people to continue feeding property development, it is too big an issue should this market collapse. However, this also make people with less confident with CNY, dumping the currency to avoid more losses. 

Where have I seen this before? Let's go back to this article Is this the end of the China miracle?

In fact, I have come across these video on youtube.com that can better explain the decline of Japan market than I do.

If I use the principle of technical analysis, the third rule states that "history repeats itself". But this time, I believe it is China's turn. The question is: How would the people react?