USD/CNH Technical Analysis: hits lowest since Aug. 29, H&S breakdown confirmed

• The USD/CNH pair (offshore yuan exchange rate) is currently trading at 6.8103, having clocked a low of 6.8056 earlier today – a level last seen on Aug. 29.
• The minutes of the December Fed meeting released yesterday reinforced investors’ expectations that the central bank could rein rate hikes, sending the US dollar lower across the board.
• The USD/CNH pair closed well below 6.8367 yesterday, confirming a head-and-shoulders breakdown. Put simply, the rally from the March 2018 low of 6.2353 has ended and the bears have likely regained control.                            
• The 5-, 10-, and 20-day MAs are trending south indicating a bearish setup. The 14-day relative strength index (RSI) of 35 is also biased toward the bears.
• The pair risks falling below 6.80, albeit after a minor bounce. Moreover, markets usually crowd out the weak hands before capitalizing on a major bearish or bullish move.

Daily Chart

Trend: minor bounce likely before further losses