USD/CNH technical analysis: Rises 0.22%, confirming falling channel breakout

USD/CNH's 4-hour chart is reporting a falling channel breakout or a revival of the rally from 6.85.
The pair could soon revisit the recent high of 7.1396.

Omkar Godbole FXStreet Contributor

Another wave of CNH selling could soon hit the market as the USD/CNH technical charts are reporting a bullish breakout.

For instance, the pair has jumped 0.22% to levels above 7.08 today, confirming an upside break of the falling channel on the 4-hour chart.

The breakout indicates the correction from the Aug. 5 high of 7.1396 has ended and the rally from lows near 6.85 seen in July has resumed.

So, the pair could retest 7.1396 in the next couple of days. The bullish case would weaken if the pair finds acceptance below the previous day's low of 7.0547, although, as of writing, that looks unlikely.

The minutes of Federal Reserve's July meeting released on Wednesday validated Chairman Powell's reluctance to start a full-blown easing cycle. Hence, the USD is expected to remain bid during the day ahead.

4-hour chart

Trend: Bullish

Pivot points

1. R3 7.0932
2. R2 7.0832
3. R1 7.0753
PP 7.0652
1. S1 7.0573
2. S2 7.0473
3. S3 7.0394

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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