USD/CNH technical analysis: Sidelined near 7.11, potential head-and-shoulders on daily
- USD/CNH's daily chart shows consecutive inside bar candlesticks.
- A close below 7.09735 is needed to confirm a range breakdown.
- The pair may end up creating a head-and-shoulders pattern after range breakdown.
USD/CNH is lacking a clear directional bias for the third straight day. The pair is currently trading at 7.11, having charted lower highs and higher lows over the last three days.
Essentially, the pair has created back-to-back inside bar candlestick patterns on the daily chart.
A break above 7.1260 – the high of the first inside bar candle created on Monday – would imply a resumption of the rally from Sept. 13's low of 7.0309.
Meanwhile, a close below 7.09735 – the low of the first inside bar candle created on Monday – would mean bearish reversal and expose levels below 7.06. Such a decline would mark the completion of an head-and-shoulders pattern on the daily chart.
As of now, the neckline support is seen around 7.0470. A close lower would confirm a breakdown and open the doors to 6.90 (target as per the measured move method).
Daily chart
-637049704038865674.png)
Trend: Bearish below 7.09735
Technical levels
Author
Omkar Godbole
FXStreet Contributor
Omkar Godbole, editor and analyst, joined FXStreet after four years as a research analyst at several Indian brokerage companies.
