Franco Shao writes:After breaking below the lower support trend line of the triangle patter on the daily chart, USDCNH continued to break through the 6.8680 key support, indicating that the bearish movement from the January 3 high of 6.9867 has resumed. Further decline to test the support of the January 5 low of 6.7817 could be seen in a couple of weeks.

On the 1-hour chart, there is a bearish trend line with resistance at around 6.8475. As long as the USDCNH pair is below the trend line, the short term downtrend from 6.8876 could be expected to continue. The key resistance for the short term downtrend is at 6.8520, only a break above this level will indicate that consolidation for the downtrend is underway, then range trading between 6.8336 and 6.8600 could be seen.

For the long term analysis, the USDCNH pair stays in a bullish price channel on its weekly chart, suggesting that the pair remains in the long term uptrend from the January 2014 low of 6.0152, and the fall from 6.9867 could be treated as consolidation of the bullish movement. The bottom support trend line of the channel is now at around 6.7400, strong rebound could be expected after touching channel support.

Technical levels

Support levels: 6.7817 (January 5 low), 6.7400 (the bottom trend line of the price channel on weekly chart).

Resistance levels: 6.8475 (the trend line resistance on 1-hour chart), 6.8520 (the key resistance

This article is written by Franco Shao, a senior analyst at ForexCycle.

© 2017 Copyright Franco Shao - All Rights Reserved Disclaimer: The above is a matter of opinion provided for general information purposes only and is not intended as investment advice. Information and analysis above are derived from sources and utilising methods believed to be reliable, but we cannot accept responsibility for any losses you may incur as a result of this analysis. Individuals should consult with their personal financial advisors.

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