USD/CNH Technical Analysis: Trying to Break August Top
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- USD/CNH Technical Strategy: Flat
- Yuan Back on the Defensive as Prices Try to Clear August Swing Top, Renew Uptrend
- Absence of Actionable Trade Setup Calls for Patience Until Viable Opportunity Emerges
The US Dollar is attempting to renew upside momentum against the Chinese Yuan in offshore trade after a spike to four-month highs failed to hold up yesterday. Prices are flirting with the late August swing top once again, with confirmed breakout opening the door for resumption of the long-term uptrend set from January 2014.
Near-term resistance is at 6.5254, the 76.4% Fibonacci expansion, with a break above that on a daily closing basis opening the door for a test of the 100% level at 6.5596. Alternatively, a reversal back below the 61.8% Fib at 6.5043 clears the way for a challenge of the 50% expansion at 6.4872.
An actionable trade setup is absent at this point. On one hand, prices are too close to resistance to justify a long position from a risk/reward perspective. On the other, the absence of a defined bearish reversal signal warns against taking up the short side. We will remain on the sidelines for now, waiting for a more compelling setup to present itself.
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