USDCNH skyrocketed above the symbolic 7.00 level on Monday and to all time-highs after breaking the crucial 6.960-6.980 ceiling that kept bulls under control more than three years now.
Technically, some weakness could be reasonably awaited in the short-term as both the RSI and the Stochastics are currently flashing overbought.
Still, with the MACD increasing positive momentum above its red signal line, any weakness could be manageable, especially if the market action holds above 6.96. If not, then the pair could head south to meet the restrictive 20- and the 50-day exponential moving averages (EMA) within the 6.914-6.888 region where the upper surface of the Ichimoku cloud also happens to be. Moving even lower, a failure to hold above the 6.814 level and the 200-day EMA could trigger a more aggressive sell-off.
In the positive scenario, any successful breakout above today’s peak of 7.108 may lead the market to new uncharted waters, with nearby resistance probably emerging around 7.195 and near the 261.8% Fibonacci extension of the 6.960-6.814 bearish wave. Should the buying interest persist, traders could shift attention towards the next Fibonacci level of 7.43.
In brief, USDCNH is viewed strongly bullish at the moment but any downside correction cannot be ruled out either.
