Rabo Bank: USD/CNY rally could still extend to 6.40~ in the coming months

Quotes from Rabo Bank

• The price action witnessed throughout 2014 and so far this year implies that 6.40~ could be a valid mid-term target for USD/CNY.
• Following the sharp retracement to around 6.11 low in October (marked as wave 2 on our chart), USD/CNY regained strong upside traction rallying to the ytd high at 6.2779 on March 2.
  
  
• The underlying upside trend strengthened as the 50-dma crossed over the 200-dma in January. This strong rally could be wave 3 in the making with the 2012 high at 6.3964 as a potential mid-term target. From a fundamental point of view such a scenario is also plausible as outlined by Rabobank's Michael Every here and here).
• Once this target is reached, another leg lower might develop forming wave 4 with the 2014 high at 6.2674 providing important support. When the wave 4 is completed, USD/CNY should resume upside trend towards 6.50~ level.
• A sharp retracement well below the 6.23~ pivot would undermine such a bullish scenario. Allowing USD/CNY to move higher would ease the downside pressure on EUR/CNY probing the support area formed by the 2000/01 low at 6.8477/6.9226.