USD/CNH erases downward rally; rebounds on a 6-month low.
USD/CNH plunged to a new six-month low of 6.7360 in Friday’s session, creating three straight negative days. The price dropped beneath the 23.6% Fibonacci retracement level of the up-leg from 6.2350 to 6.9781, however, currently, it is paring some of the lost ground.
The RSI is pointing up near oversold levels, slightly below 30, indicating that the market could strengthen a little bit in the short-term until the index falls back below that threshold, while the MACD supports a bearish picture as well, since the index continues to increase negative momentum below its red-signal line.
If the market manages to pick up speed, the 6.7820 could offer nearby resistance ahead of the 23.6% Fibonacci, which stands at 6.8023. A significant close above the latter would break the 6.8545, raising chances for further increases. In this case, prices could climb towards the 20-day simple moving average (SMA) at 6.8618.
However, if prices decline, immediate support could be found around the six-month low, an area which has provided strong support level in the
In the short-term, the outlook remains negative since prices hold below all the moving average lines and the bearish cross between the 20- and the 40-day SMA stays in place.
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