USD/CNH Price Analysis: RSI probes further downside around 6.40 key support
- USD/CNH bounces off yearly bottom amid nearly oversold RSI.
- 10-day SMA, two-month-old resistance line guard corrective pullback.
- PBOC intervenes with a $1.56 billion move the latest.
USD/CNH extends bounce off three-month low, around 6.4100 during early Tuesday.
Even so, RSI conditions suggest a corrective pullback towards a last Tuesday’s low near 6.4180. Though, any further upside will be challenged by a 10-day SMA level of 6.4340 and a downward sloping trend line resistance line from early April, around 6.4380.
In a case where USD/CNH bulls manage to conquer the 6.4380 hurdle, also cross the 6.4400 round figure, the monthly horizontal resistance near 6.4615 will be in the spotlight.
On the contrary, a daily closing below the 6.4000 threshold becomes necessary for the bears to visit the early 2018 levels surrounding 6.3700.
Overall, USD/CNH remains bearish but corrective pullback can’t be ruled out.
It's worth mentioning that China's central bank, People's Bank of China (PBOC), intervened in the market with a 10 billion yuan (about 1.56 billion U.S. dollars) reverse repo move. With this, the 7-day reverse repo rate is at 2.2% per the PBOC statement.
USD/CNH daily chart
Trend: Pullback expected
Author
Anil Panchal
FXStreet
Anil Panchal has nearly 15 years of experience in tracking financial markets. With a keen interest in macroeconomics, Anil aptly tracks global news/updates and stays well-informed about the global financial moves and their implications.
