USD/CNH Price Analysis: Finds resistance near 7.3600 within an overbought territory

USD/CNH may correct downwards as the 14-day RSI indicates an overbought condition.
The primary barrier appears at the 7.3600, followed by the rising wedge’s upper slope around the 7.4000 level.
The pair may test primary support at the nine-day EMA of 7.3346 level.

Akhtar Faruqui FXStreet

The USD/CNH pair halts its five-day winning streak, trading around 7.3570 during the Asian hours on Monday. A review of the daily chart suggests that the magnitude of price movement within the rising wedge pattern is decreasing, signaling a pause in the bullish trend.

The 14-day Relative Strength Index (RSI), a crucial momentum indicator, is positioned slightly above the 70 level, indicating an overbought condition and the possibility of a downward correction in the near term.

The USD/CNH pair could find primary resistance at the psychological level of 7.3600 level, followed by the upper slope of the rising wedge around the 7.4000 level. A break above the rising wedge could strengthen the bullish bias and support the pair to continue its rally toward the major level of 7.5000.

On the downside, the USD/CNH pair may initially test the nine-day Exponential Moving Average (EMA) at 7.3346 level, followed by the rising wedge’s lower slope around 7.3070, followed by the psychological level of 7.3000. A break below this level could weaken the bullish momentum and put downward pressure on the pair to approach the next psychological support round 7.2000 level.

USD/CNH: Daily Chart

Author

Akhtar Faruqui

FXStreet

Akhtar Faruqui is a Forex Analyst based in New Delhi, India. With a keen eye for market trends and a passion for dissecting complex financial dynamics, he is dedicated to delivering accurate and insightful Forex news and analysis.

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