Talking Points:
- USD/CNH trading above 6.6500 at the time of writing
- A close above the 6.6500 level might expose the 6.7 handle
- A move lower may put the focus on the 6.6 handle again
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The US Dollar is surging higher versus the Chinese Yuan in offshore trade (at the time this report was written), after the EU Referendum vote sent the financial markets into disarray.
Last week, we took a much longer term view of the pair in anticipation of the upcoming volatility. As the market might now slowly adjusts to the new reality, we look to return to a slightly shorter term outlook.
After the pair blasted higher and moved through the 6.6 handle, the next level of significance appeared to be the 6.6500 level. At the time of writing, the pair has managed to move above the level. A close and a hold above the 6.6500 figure could potentially expose the 6.7 handle for possible resistance.
If the pair manages to move above the 6.7 figure, resistance might be found around the January high at the 6.75847 level.
A move below 6.6500 may put the focus again on the 6.6 handle for possible support, followed by the 6.5500 level.
A break below that level could put the spotlight on a possible trend line support from October 2015, with a major support confluence zone (marked blue) that combines the 6.5000 handle, 200 day SMA and the 6.47446 level, which is the 0.382 Fib from the long term up trend as marked from the 2014 low at 6.0150.
USD/CNH Daily Chart: June 27, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail instructor@dailyfx.com
