USD/CNH Price Analysis: Yuan overbought for first since March 2018

USD/CNH's weekly chart indicator shows CNH's rally is overdone.
The pair's daily chart also favors a corrective bounce.

Omkar Godbole FXStreet Contributor

The USD/CNH pair may be in for consolidation or minor bounce, as the offshore yuan or CNH looks overbought for the first time in over two years.

USD/CNH's 14-week relative strength index (RSI) has declined below 30, a sign of oversold conditions. A sub-30 reading was last seen in March 2018.

The daily chart is also reporting oversold conditions for the third straight week. An oversold reading on the RSI implies the sell-off is overdone. However, the oversold reading needs validation from signs of downtrend exhaustion on the price chart.

The pair created an inverted hammer last Thursday, indicating seller fatigue and potential for reversal higher.

All-in-all, the odds appear stacked in favor of a corrective bounce. The immediate resistance is seen at 6.8135 (Sept. 1 low) followed by 6.9048 (March 9 low). Meanwhile, support is seen at 6.7423 (Sept. 16 low).

Weekly chart

Daily chart

Trend: Oversold

Technical levels

USD/CNH

Overview
Today last price	6.7596
Today Daily Change	-0.0194
Today Daily Change %	-0.29
Today daily open	6.779

Trends
Daily SMA20	6.8354
Daily SMA50	6.9165
Daily SMA100	7.0041
Daily SMA200	7.0077

Levels
Previous Daily High	6.7794
Previous Daily Low	6.7452
Previous Weekly High	6.835
Previous Weekly Low	6.7422
Previous Monthly High	6.9938
Previous Monthly Low	6.8436
Daily Fibonacci 38.2%	6.7663
Daily Fibonacci 61.8%	6.7583
Daily Pivot Point S1	6.7562
Daily Pivot Point S2	6.7336
Daily Pivot Point S3	6.722
Daily Pivot Point R1	6.7906
Daily Pivot Point R2	6.8022
Daily Pivot Point R3	6.8248

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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