This morning's announcement by the Bank of China to allow U.S. trading firms and individuals to open accounts (in its NY branch) to buy and sell yuan might have signaled a significant move by Chinese authorities to let the currency both freely trade and to allow market forces to push its value higher -- to avert criticism prior to the China Premier's visit to Washington next week.

A higher yuan has self-serving interests as well, with China battling inflationary concerns, all of which likely has contributed to today's up-gap strength that has propelled the iShares FTSE China 25 Index Fund (FXI) towards a test of its prior rally peak at 45.18 (from December 2).

Can the China market decline into a state visit? Possible, but unlikely, don't you think... especially in the highly interventionist world in which we find ourselves. That aside, the near-term technical set-up remains very favorable for higher prices that hurdle 45.18 on the way to 47.00-48.00.

 

Mike Paulenoff is a 26-year veteran of the financial markets and author of MPTrader.com.