USD/CNH technical analysis: Eyes 5-day MA support at 7.02

• USD/CNH created a candle with a long upper wick on Tuesday, a sign of buyer exhaustion.
• A key daily chart indicator is reporting overbought conditions.

USD/CNH is looking heavy at press time and could test the 5-day moving average, currently located at 7.02.

As of writing, the pair is trading at 7.06, up 0.11% on the day.

The currency pair clocked a fresh record high of 7.14 in the Asian session yesterday, before ending the day with 0.62% losses at 7.0522.

Essentially, the pair created a big red candle with a long upper wick, a sign of buyer exhaustion. Add to that the overbought or above-70 reading on the 14-day relative strength index (RSI) and the pair looks set for a deeper correction.

The focus would shift to 6.98 (November 2018 high) if the 5-day MA support is breached.

Daily chart

Trend: Correction likely

Pivot points