USD/CNH technical analysis: Drops to head-and-shoulders neckline support

USD/CNH has tested the head-and-shoulders neckline support of 7.0735.
A close below that level would confirm a breakdown and a bullish-to-bearish trend change.

Omkar Godbole FXStreet Contributor

The USD/CNH pair has tested key support a few minutes amid the Sino-US trade optimism.

The currency pair is currently trading around 7.0841, having dropped to 7.0735 – the neckline of the daily chart head-and-shoulders pattern – soon before press time.

The bid tone around the offshore Chinese Yuan (CNH) strengthened in early Asia on a "Phase 1 Deal" between the US and China. With the partial deal, President Trump has delayed the planned Oct. 15 tariff hike. That said, whether the tariffs in December will be pushed off as well.

As of now, however, the Yuan is mildly bid on the partial US-China trade deal.

A daily close below 7.0735 would confirm a head-and-shoulders breakdown and open the doors for 6.95 (target as per the measured move method).

On the way lower, the pair may find support at 7.03 (Sept. 13 low). A bounce from the neckline and a break above the 50-day moving average, currently at 7.1075, would weaken the bearish prospects.

Daily chart

Trend: Bearish below 7.0365

Technical levels

USD/CNH

Overview
Today last price	7.0857
Today Daily Change	-0.0024
Today Daily Change %	-0.03
Today daily open	7.0881

Trends
Daily SMA20	7.1183
Daily SMA50	7.1098
Daily SMA100	7.0049
Daily SMA200	6.8836

Levels
Previous Daily High	7.128
Previous Daily Low	7.0704
Previous Weekly High	7.1705
Previous Weekly Low	7.0704
Previous Monthly High	7.1967
Previous Monthly Low	7.0311
Daily Fibonacci 38.2%	7.0924
Daily Fibonacci 61.8%	7.106
Daily Pivot Point S1	7.063
Daily Pivot Point S2	7.0378
Daily Pivot Point S3	7.0053
Daily Pivot Point R1	7.1206
Daily Pivot Point R2	7.1531
Daily Pivot Point R3	7.1783

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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