Interday technical analysis of USDCNH

The typical interday timeframe of the dollar against the offshore yuan renminbi (USDCNH; also erroneously called ‘USDCNY’) does not show a clear trend. Price on H4 has consolidated after last month’s exceptionally strong gains. Based on recent events, the most important high resistance on this chart is the area of 6.959. This area was tested unsuccessfully twice in the first half of June. Significant support occurs around 6.916: this area has withstood several tests. Low support might be the key psychological area of 6.90.

Technical indicators on USDCNH H4

Moving averages in general do not suggest a clear signal. Price is very close to all of the 20, 50, and 100-period SMAs. There has been no indication over the last few weeks of a sustained move either above or below these MAs. One can explain the presence of the 200 SMA much lower by noting the large gains for USDCNH last month.

The picture of consolidation and sideways movement seems to be strengthened by the significant contraction in Bands. Bollinger Bands (20, 0, 2) here are currently at their narrowest for several weeks. Meanwhile the slow stochastic (15, 5, 5) does not produce a clear signal at the time of writing. 66 for the main line is closer to overbought that oversold, though. MACD is also unclear at the moment with both the histogram and signal line close to zero.

Price action and Fibonacci

Price action on this timeframe suggests indecision. The last week to date featured an unusually large number of dojis as well as a fairly large amount of wicks and tails. The relatively large wick of the current candle overlapping the upper deviation of Bands could suggest that upward momentum is unlikely. However, one should wait for completion of the period for confirmation.

Based on the most recent high and low, we can suggest that the 50% and 23.6% Fibonacci areas are the borders of a channel. These areas are probably the most important near-term support and resistance for USDCNH.

Interday technical analysis USDCNH: summary

Overall, USDCNH is likely to continue to trend sideways on this timeframe in the near future. A move back to 23.6% Fibo seems to be possible in the runup to the Fed’s meeting tomorrow evening. After this, fundamentals and especially the trajectory of American rates will probably overshadow the technical picture.

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