USD/CNH Price Analysis: Impending golden cross could yield flag breakout

USD/CNH's daily chart shows a bull flag or a bullish continuation pattern.
The impending golden cross suggests scope for a bullish breakout;

Omkar Godbole FXStreet Contributor

USD/CNH remains trapped in a bull flag - a bullish continuation pattern, which would accelerate the upward move from the March 9 low of 6.9042 and open the doors for a test of resistance at 7.1956 (September high).

A daily close above the top end of the bull flag at 7.1197 would confirm a flag breakout. That looks likely as the 50-day average is trending north, indicating a strengthening of upward momentum and looks set to cross above the 200-day average in a day or two.

The resulting golden crossover, a widely-tracked bull market indicator, would be the first since June 2014. Some observers would argue that the golden cross is a lagging indicator. While that is true, the 14-day relative strength index is showing no signs of overbought conditions. The crossover, therefore, could invite stronger buying pressure.

At press time, the pair is trading largely unchanged on the day near 7.0910. The probability of the pair confirming a flag breakout on Wednesday would rise if China's Caixin Manufacturing PMI, which surveys small and medium-sized export-oriented units, prints below estimates.

Daily chart

Trend: Bullish

Technical levels

USD/CNH

Overview
Today last price	7.0910
Today Daily Change	0.0026
Today Daily Change %	0.04
Today daily open	7.0926

Trends
Daily SMA20	7.042
Daily SMA50	7.0093
Daily SMA100	6.9978
Daily SMA200	7.0158

Levels
Previous Daily High	7.1184
Previous Daily Low	7.0808
Previous Weekly High	7.1518
Previous Weekly Low	7.059
Previous Monthly High	7.1654
Previous Monthly Low	6.9048
Daily Fibonacci 38.2%	7.0952
Daily Fibonacci 61.8%	7.1041
Daily Pivot Point S1	7.0762
Daily Pivot Point S2	7.0597
Daily Pivot Point S3	7.0386
Daily Pivot Point R1	7.1138
Daily Pivot Point R2	7.1349
Daily Pivot Point R3	7.1514

Author

Omkar Godbole

FXStreet Contributor

Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.

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