USD/CNH Technical Analysis: Top Formation in Progress?
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- USD/CNH Technical Strategy: Flat
- Chinese Yuan Claws Back Ground vs. US Dollar After Dropping to Lowest in 4 Months
- Risk/reward, Technical Considerations Argue Against Committing to a Trade for Now
The US Dollar edged lower against the Chinese Yuan as expected in offshore trade but sellers have been unable to breach near-term range support thus far. Negative RSI divergence continues to warn that a more substantial topping process may be taking place.
From here, a daily close below the 23.6% Fibonacci retracement at 6.5127 opens the door for a challenge of the 38.2% level at 6.4749. Alternatively, a push above the 23.6% Fib expansion at 6.5720 paves the way for a test of the 38.2% threshold at 6.6079.
An actionable trade setup is absent at this point. On one hand, prices are too close to support to justify entering short from a risk/reward perspective. On the other, the absence of a defined bullish reversal signal hints that taking the long side is premature. We will remain flat for now, waiting for a better-defined opportunity to present itself.
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