USD/CNH Technical Analysis: Long-Term Uptrend Resuming?
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- USD/CNH Technical Strategy: Flat
- Yuan down trend may be resuming after breach of critical chart barrier
- Opting against long position as fundamental backdrop remains clouded
The US Dollar paused to digest gains having advanced to the highest level in four weeks against the Chinese Yuan in offshore trade. Prices have broken trend line resistance capping gains since the beginning of the year, hinting the longer-term uptrend may be resuming.
Near-term resistance is at 6.5589, the 38.2% Fibonacci retracement, with a break above that on a daily closing basis opening the door for a test of the 50% level at 6.5970. Alternatively, a move below the 23.6% Fib at 6.5118 paves the way for a challenge of 6.4827, the intersection of the 14.6% retracement and trend line resistance-turned-support.
Tactically speaking, we continue to find it ill-advisedtake up CNH exposure against the backdrop of instability as the disparity between Beijing officials and the markets remains largely resolved. With that in mind, we will remain on the sidelines.
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