Talking Points:
- USD/CNH found support around 6.6500, formed a “Morning Star” bullish pattern
- Pair trading in a narrow short term range between 6.6700 and 6.6860
- 6.7 breakout key for any real bullish conviction
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The US Dollar remains elevated versus the Chinese Yuan in offshore trade, as the pair currently trades in proximity to the 6.6860 interim resistance level.
Having formed a “Morning Star” bullish technical pattern around support at 6.6500, the pair traded higher until hitting the aforementioned resistance level, which has since capped gains.
At this stage, the pair is trading in a narrow short term range between the 6.6700 short term support level and the 6.6860 resistance.
A break above resistance at 6.6860 might expose the 6.7 handle, which seems key for any real bullish conviction; a break higher might be required to signal a continuation of the bullish trend.
A break below 6.6700 seems likely to shift focus to 6.6500 followed by 6.6224, which also coincides with a long term up trend line.
It’s important to note the both the Yuan’s onshore and offshore borrowing rates m ay increase ahead of the Chinese “National Day “ holiday.
USD/CNH Daily Chart: September 26, 2016
--- Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni
