USD/CNH Technical analysis: Trapped in a sideways channel above 6.90

USD/CNH seems stuck in a sideways channel on the hourly chart.
Trade tensions favor upside breakout, but indicators flashing overbought conditions.

Omkar Godbole FXStreet Contributor

USD/CNH is oscillating in a narrow range of 6.95-6.92 for the fourth straight day with key indicators flashing overbought conditions.

The widely followed 14-day relative strength index (RSI) is holding well above 70.00, a sign of overbuying.

Therefore, the channel seen on the hourly chart could be breached to the downside. That could yield a pullback to 6.87-6.85.

Trade tensions, however, continue to escalate with the US reportedly planning to cut off the flow of vital American technology to five Chinese companies.

As a result, a range breakdown could be short-lived or may remain elusive with USD/CNH rising above 6.95. That would expose the 2018 high of 6.98.

Hourly chart

Trend: Neutral

Pivot points

1. R3 6.9614
2. R2 6.9513
3. R1 6.9437
PP 6.9337
1. S1 6.9261
2. S2 6.916
3. S3 6.9084

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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