USD/CNH Technical Analysis: Rally Stalls at 5-Year High
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- USD/CNH Technical Strategy: Flat
- Yuan Selloff Against US Dollar Stalls After Prices Surge to Highest Level in Five Years
- Policy-Driven Volatility Threat, Inconclusive Chart Setup Warn Against Taking Trades
The US Dollar stalled after rising to the highest levelin five years against the Chinese Yuan in offshore trade, snapping a four-day winning streak. The surge higher followed the largest devaluation of the onshore exchange rate since August but prices failed to maintain momentum.
From here, a daily close above the 50% Fibonacci expansion at 6.7096 opens the door for a test of the 61.8% level at 6.7444. Alternatively, a reversal below the 38.2% Fib at 6.6748 paves the way for a challenge of the 23.6% expansion at 6.6317.
The pair has now put in a Shooting Star candlestick, hinting at indecision that may precede a reversal downward. The absence of an actionable trade setup and the lingering threat of disruptive intervention from policy officials warn against committing to exposure however. As such, we will remain flat.
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