On one hand, USD/CNH is forming lower highs, trading below a short-term downside resistance line taken from the high of February. On the other hand, the pair is struggling to make lower lows. One could even say that the rate is stuck within a descending triangle. Now, it seems that USD/CNH is trying to make its way towards the upper side of it, which if remains intact, could invite the sellers back into the action. Such a move might cause the pair to slide back down, hence why we will remain somewhat bearish in the near term.
If USD/CHN travels a bit more to the upside, it may test the 6.7150 barrier, marked by the high of April 16th. Slightly above that runs the aforementioned downside resistance line (the upper side of the descending triangle), which might provide additional resistance. If both of those succeed in withstanding the bull-pressure, eventually, the buyers might step aside for a while and let the bears take control again. This is when we will target the 6.7000 support area, a break of which could bring the rate even further down, potentially testing the 6.6860 hurdle, marked by yesterday’s intraday swing low.
Alternatively, a break above the previously mentioned downside resistance line could force the bears to start worrying about their capabilities to drag the pair lower, at least in the near term. If USD/CNH moves further north and breaks above the 6.7300 barrier, this is when we could see more bulls jumping in and pushing the pair towards the 6.7415 obstacle, marked by the high of March 29th. If the buying doesn’t end there, a break of that obstacle might bring the rate to test the March high, at 6.7500.
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