USD/CNH – Yuan Could be Gaining Strength

Some points to consider in this Forex market:

• The Chinese yuan gains some strength versus the USD after hitting a four month low.
• No trade right now as the average trading range (ATR) is too narrow.
• Trade strategy: Stand aside

The USD/CNH Forex market has been edging lower as a possible top is forming. This was expected as offshore traders have entered the market and put bets on the CNH. However, sellers have yet to find significant follow though by breaking through range support levels. There is also negative RSI convergence hinting at a weakening Dollar.

Technical Analysis

Let’s discuss today’s daily USD/CNH technical analysis. There is near term support lining up at 6.5128. A daily close below this level challenges the next technical support at 6.4750. The alternative USD/CNH technical analysis, should the US Dollar recover, notes technical resistance lining up at 6.5720. A break above this technical level challenges the next technical resistance level lining up at 6.6080.

Trade Strategy

Trade strategy for the USD/CNH is a bit complicate. On one hand, price action is too close to a technical support to justify a short USD trade. Risk to reward analysis screams premature. There is also no defined bullish reversal signal so a long Dollar trade is premature. With no actionable trade setup for now, I will opt to stand aside and monitor my charts for a better trade opportunity to come along. For today, I am flat in the USD/CNH Forex market.