- USD/CNH picks up bids to extend early week rebound from the key Fibonacci retracement level.
- Convergence of 100-DMA, previous support line from October challenges buyers.
- MACD, RSI conditions suggest further hardships for bulls.
USD/CNH prints a two-day uptrend around 6.9870 while extending the week-start rebound from the lowest levels in three months.
That said, the offshore Chinese Yuan (CNH) pair prints mild gains while defending the bounce off the 61.8% Fibonacci retracement level of the August-October upside.
Although the recovery moves from the key Fibonacci retracement level, also known as the golden ratio, teases the USD/CNH bulls, the downbeat RSI (14) and bearish MACD signals challenge the quote’s further upside.
Also raising doubts on the USD/CNH run-up is the joint of the 100-DMA and the support-turned-resistance line from October, near 7.0265-70.
It’s worth noting that the pair’s advances past 7.0270 need validation from the 50% Fibonacci retracement level surrounding 7.0465 before giving control to the buyers.
In that case, a gradual run-up towards the late October swing low near 7.1660 can’t be ruled out.
Alternatively, a daily closing below the 61.8% Fibonacci retracement level of 6.9688 could quickly drag the USD/CNH prices to the latest trough surrounding 6.9300.
Following that, the lows marked during mid-September, close to 6.9100, acts as the last defense of the USD/CNH bulls.
USD/CNH: Daily chart
Trend: Pullback expected
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