CNY is indeed getting stronger

 I did not intend to have this entry. It was some time ago that I received news that China currency depreciating. It was not a currency pair of my interest; I shelved this currency pair after my last entry Is China doing badly? dated 28th September 2024.  

I noted at the time a potential double top formation with tendency to decline downward, meaning a strong CNY. I expected a support level of between 6.8551 to 6.9459 at the point of time.

Well, after completing my trade this morning, I just got curious and decided to take a look at its chart.

It was to my surprise that there is a firm break out of its double top and in progress of heading downward!

Fig 1. CNY weekly chart

From the chart, it is close to its 61.8% extension of 6.7942. This will be a possible area of reversal. In reversal, I believe it is going to correct. Why?

This is base on probability, there is a retracement to neckline after breakout from top or bottom formation. 

This correction may end at its neckline of 7.0010. 

On continuation, we should see the next support at 6.6603, which is its double top objective. Will it reverse after that? Not sure, as the present setup only tells me this much.