The USD/CNH currency pair is hovering around the 7.1690 level during Wednesday’s Asian session, pausing its four-day winning streak. Price action reveals a clear consolidation pattern, as the pair continues to trade within a rectangle formation on the daily chart, suggesting indecision in the market.
📉 Bearish Momentum Signals Emerge
Technical indicators are tilting bearish. The 14-day Relative Strength Index (RSI) remains below the neutral 50 mark, highlighting ongoing downside momentum. Moreover, the pair is currently trading under its 9-day Exponential Moving Average (EMA) at 7.1781, reinforcing the short-term bearish sentiment.
📊 Key Support and Resistance Levels
- Immediate Support: The pair is testing the rectangle’s lower boundary near 7.1680. A decisive break below this area could accelerate losses, with potential to retest the seven-month low of 7.1603 (June 25 low).
- First Resistance: The 9-day EMA at 7.1781 stands as the nearest hurdle. A break above this level may shift short-term momentum toward the 50-day EMA at 7.2102, followed by the rectangle’s upper resistance near 7.2150.
- Extended Resistance: Further upside could encounter resistance at the monthly high of 7.2240, posted on June 2.
🔍 Outlook
The consolidation within the rectangle pattern suggests a potential breakout is brewing. Traders should closely monitor price behavior around the 7.1680 support. A breakdown could reaffirm bearish continuation, while a bounce may revive bullish sentiment toward key resistance zones.
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