CNY- an indication of health for China's economy

I was looking at the charts this weekend, I was quite reluctant to work on the charts. The charts do not look spectacular, and it is quite an effort to talk about them. However, I felt the need to ensure at least an entry for this weekend. 

I went through the past entries to see if any topic that I have not been updating for a while. It was to my surprise that I have not touched on CNY for some time already. My last mention on CNY was Federal reserve considering slowing down of rate rise.... dated November 2022. Probably it is about time I take another look at the currency.

Coincidentally, I was chasing after some drama made in China. These are not really from the official TV channels and more like short videos showing part of a complete story, amounting to about 100 episodes of 1 to 2 minutes each. The short videos were also compiled into a one complete video of around 1 to 2 hours uploaded to youtube.com.

To some extent, I am kind of obsessed with these dramas, mainly because of their duplicated yet ridiculous story lines. The stories mainly began with a spontaneous decision to register a marriage with a stranger who seemingly to be a nobody. Unbeknown to the person is that the person he or she married to is with a hidden identity who is either super rich, highly ranked, with strong martial art skill or a highly skilled physician who ended up helping the person to succeed in life.

A slight variation involves a man of "lowly status" who married into the rich family (Chinese tradition in general with the female married into the male family), helped the family to build their business in secret who eventually betrayed him, and eventually regretted after he turns out to be hyper rich and powerful and set to destroy them.

The one common theme in this is "super-rich" who deals with billion dollars contracts and showing off their riches. 

These dramas are all in portrait mode and adapted for viewing using mobile phone, with the working class as their target audience. They are not made with good quality and the stories were with huge loopholes. 

One most ridiculous one involves a young woman who is a doctor with mastery in Chinese medicine, she is coincidentally also an artist who is a master in jewels design, famous hacker and also a very rich businesswoman, unbeknown to her husband.

To me it reflects the situation in China, where the working class in a dead-end job struggling to survive day by day. They are with no way out and desperate to escape their reality by immersing themselves in these dramas to escape reality. 

I suspect the people of China are really in a very bad shape.

Considering the recent hype on further devaluation of CNY against USD, it is worthwhile to check on this chart.

Fig 1. CNY weekly chart

In my last update on CNY, I was expecting a correction before heading higher but I was uncertain. This is mainly because CNY is going through multiple layers of moving averages.

Since then, CNY rebound after crossing 55-week moving average, and managed to supersede the previous high. Furthermore, the moving average patten is consistent with CNY creeping high with this chart, indicates a further weakening of CNY against USD. 

CNY has lately tested its major 61.8% projection resistance of 7.337, though retreated, it is testing this resistance level again, bouncing up from its 21-week moving average support. The chance for it to go even higher is high with next level of resistance at between 7.7293 to 8.0086. 

On a more immediate future, I see a resistance zone between 7.37439 to 7.54820.

In Xi Jin Ping's speech during his attendance of BRICS meeting in South Africa recently, he re-iterated that China will support the members of the BRICS financially.  

BRICS has attracted a lot of countries whose economy are on brink of collapse; they are asking for handouts and will not be grateful to China on its financial support. It will eventually lead to a weaker China is much lesser international influence once its usefulness is depleted.

To be frank, it is much better if he spends this money to improve the economic condition of China instead. Continue its present direction and China will definitely follow the path of Japan who just gone through multiple decades of depression. Unfortunately, the political set up of China will not allow changes since it is with dictatorship.