USD/CNH Price Analysis: Reverses from 38.2% Fibo retracement at 6.6550
- A double test of the 38.2% Fibo retracement strengthens a bullish reversal.
- The RSI (14) is expected to overstep 60.00, which will delight the greenback bulls.
- An establishment above 20- and 50-period EMAs add to the upside filters.
The USD/CNH pair has witnessed a minor correction after a former upside move to near 6.7300. The minor corrective move is expected to convert into an initiative buying action, which will drive the asset higher.
On the four-hour scale, the USD/CNH pair has bounced back sharply after re-testing the 38.2% Fibonacci retracement (which is placed from April 8 low 6.3583 to May’s high 6.8385) at 6.6554. The downward sloping trendline placed from May’s high at 6.8365, adjoining May 16 high at 6.8206 and May 19 high at 6.7883 respectively will act as major resistance for the counter.
A range shift move from 20.00-40.00 to 40.00-60.00 by the Relative Strength Index (RSI) (14) signals that the asset is not bearish anymore. Also, the range shift action by the RSI (14) indicates that the oscillator will breach 60.00, which will delight the greenback bulls.
The asset has overstepped the 20- and 50-period Exponential Moving Averages (EMAs) at 6.6964 and 6.7112 respectively, which confirms an establishment of short-term upside momentum.
A decisive breach of the downward sloping trendline at 6.7340 will send the major towards May 18 high at 6.7882. Breach of the latter will drive the asset to May’s high at 6.8365.
On the flip side, the Chinese yuan bulls could dominate if the asset drops below 38.2% Fibo retracement at 6.6554. An occurrence of the same will drag the asset towards May 4 low at 6.6116, followed by April 27 low at 6.5757.
USD/CNH four-hour chart
