USD/CNH Technical Analysis: spinning bottom makes today’s close pivotal

The USD/CNH pair is showing signs of bearish exhaustion, although a close above the previous day’s high of 6.7763 is needed to confirm a temporary bullish reversal.

Daily chart

As seen above, the currency pair created a “spinning bottom” candlestick yesterday, which indicates that neither bulls nor the bears were able to dominate the proceedings. Note that the pattern has appeared at a time when the 14-day relative strength index (RSI) is reporting oversold conditions.

So, it could be argued that the spinning bottom represents bearish exhaustion. A short-term bearish-to-bullish trend change, however, would be confirmed, if the pair closes today above 6.7763 (high of the spinning bottom). Moreover, that would validate the bearish exhaustion signaled by the spinning bottom and the oversold readings on the RSI.

It is worth noting that a close below 6.7387 (spinning bottom low) would imply a continuation of the sell-off, in which case, the psychological support of 6.70 could be put to test soon.

Trend: bullish above 6.7763