USDCNH had an aggressive bullish start on Thursday, surpassing the short and medium term simple moving averages (SMAs) and the 7.0000 psychological level.
While the SMAs are moving higher, mirroring the market’s positive behavior over the past three days, the RSI indicator is still holding in bullish territory, flagging that a recovery could reemerge in the short term. The MACD is also approaching the zero line, creating a bullish crossover in the negative zone.
In case the pair changes its direction to the upside, the bulls will probably challenge the 50.0% Fibonacci retracement level of the down leg from 7.1944 to 6.8433 at 7.0185 ahead of the latest top of 7.0560 and the 61.8% Fibonacci of 7.0595. Further up the area around 7.0859 could be another potential obstacle for upward movements.
Alternatively, additional declines may drive the price towards the 20- and 40-day SMAs, which stand near the 38.2% Fibo of 6.9774. Beneath the latter, the lower surface of the Ichimoku cloud of 6.9485 and the 23.6% Fibo of 6.9624 come into view.
Turning to the medium-term picture, the pair switched to neutral mode after the rally off 6.9030. The 50- and the 200-day SMAs are flattening suggesting that the market is changing direction from negative to neutral.