USD/CNH Technical Analysis: Chart Setup Hints at Bottoming
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- USD/CNH Technical Strategy: Flat
- Bullish candlestick pattern hints US Dollar aiming higher vs. Chinese Yuan
- Fundamental uncertainty, adverse risk/reward setup argue against exposure
The US Dollar may be preparing to turn higher against the Chinese Yuan in offshore trade after putting in a bullish Morning Star candlestick pattern. The greenback has failed to build on the setup thus far however, with prices seemingly waiting for a further catalyst to gain traction.
Near-term resistance is at 6.5505, the 14.6% Fibonacci expansion, with a break above that on a daily closing basis opening the door for a test of the 23.6% level at 6.5904. Alternatively, a reversal below the 61.8% Fib retracement at 6.4845 paves the way for a challenge of the 76.4% threshold at 6.4197.
Prices are hovering too close to near-term resistance to justify taking a long position from a risk/reward perspective. In broader terms, we continue to see it as imprudent to commit to CNH exposure against a backdrop of fundamental instability as the tug of war between Chinese officials and the markets continues.With that in mind, we remain flat.
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