The USDCNH pair failed to settle above 6.8450 resistance and pulled back to 6.7400 area, facing the previous low support at 6.7210. As mentioned before, the pullback would possibly be correction of the uptrend from 6.7210.

On the downside

The pair stays below a descending trend line on its 4-hour chart, with resistance at around 6.7660. As long as the trend line resistance holds, the downside movement could be expected to continue and deeper decline to test 6.7210 support is possible.

A breakdown below 6.7210 support will indicate that lengthier consolidation for the long term uptrend from the January 2014 low of 6.0152 is underway, then the pair will find next support level at around 6.6150, the 38.2% Fibonacci retracement taken from 6.0152 to 6.9867.

On the upside

There is another near term resistance at 6.7711, a break of this level will indicate that the short term downtrend from 6.8111 is complete, then further rise to test 6.8111 resistance could be seen, above this level will confirm that the whole correction pullback from 6.8583 is complete, then the following upside movement could bring price to retest 6.8450 resistance.

Technical levels

Support levels: 6.7210 (the June 1 low), 6.6150 (the 38.2% Fibonacci retracement).

Resistance levels: 6.7660 (the descending trend line on the 4-hour chart), 6.7711 (near term resistance), 6.8111 (key resistance), 6.8450 (the March 15 low), 6.8583 (The June 26 high), 6.9170 (key resistance), 6.9867 (the January 3 high), 7.0000 (the important psychological level).

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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