Talking Points:
– Pair is trading in a narrow short term range between 6.6700 and 6.6860
– Breakout above the 6.7000 handle might be a key bullish development
– 50-day moving average also in play
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The US Dollar is trading higher versus the Chinese Yuan in offshore trade, as the pair currently reacts to short term technical levels ahead of the China holiday period.
It’s important to note the both the Yuan’s onshore and offshore borrowing rates may increase ahead of the Chinese “National Day “ holiday.
The pair traded higher after forming a “Morning Star” bullish technical pattern around support at 6.6500, and is now trading in a narrow short term range between the 6.6700 support level and the 6.6860 resistance. The 50-day moving average is also in play, providing support for prices at the moment.
A break above resistance at 6.6860 might expose the 6.7 handle, and a break higher might be required to signal a continuation of the bullish trend.
A move below 6.6700 seems likely to shift focus to 6.6500 followed by 6.6224, which also coincides with a long term up trend line.
USD/CNH Daily Chart: September 30, 2016
— Written by Oded Shimoni, Junior Currency Analyst for DailyFX.com
To contact Oded Shimoni, e-mail oshimoni@dailyfx.com
Follow him on Twitter at @OdedShimoni