USD/CNH technical analysis: Rally stalls near 78.6% Fib
- Short-term overbought conditions are likely capping upside in USD/CNH at key Fib hurdle of 6.9140.
- A temporary pullback to 6.85 cannot be ruled out.
USD/CNH is currently trading at 6.8927, representing a 0.20% drop on the day, having struggled to find acceptance above 6.9137 (78.6% Fibonacci retracement of the drop from 6.98 to 6.6699).
The failure to scale the key Fibonacci hurdle could be associated with the overbought conditions reported by the 14-day relative strength index (RSI).
The pullback could be extended further to the ascending (bullish) 5-week moving average (MA), currently at 6.8582. The outlook, however, will remain bullish as long as the pair is holding above the 10-day MA.
On the higher side, key resistance is seen at 6.9242 (Dec. 21 high). A violation there would expose 6.95.
Daily chart
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Trend: Bullish
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
