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USD/CNH technical analysis: Breaks below key support on renewed trade optimism

  • USD/CNH has breached key hourly chart support at 7.1394.
  • Offshore Yuan (CNH) is likely cheering renewed optimism on the trade front.
  • The US and China have reportedly decided to resume trade talks in October.

USD/CNH (offshore Yuan exchange rate) fell from 7.1499 to 7.1204 on renewed optimism for US-China trade deal.

More importantly, the pair has found acceptance under the support at 7.1394, as seen on the hourly chart.

The breakdown of key support is backed by a bearish divergence of the daily chart relative strength index. Also, the moving average convergence divergence histogram has crossed below zero, signaling a short-term bearish reversal.

However, a drop to the 21-day moving average (MA) support at 7.1085 may not happen immediately, as the hourly chart RSI is reporting oversold conditions. That said, the bearish view would be invalidated only above 7.1773 (Wednesday’s high).  

As of writing, the pair is trading at 7.13097, representing 0.21% losses on the day.

Daily chart

Hourly chart

Trend: Cautiously bearish

Pivot points

 

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