The USD/CNH currency pair is showing signs of a potential corrective phase after experiencing a five-day winning streak, currently trading near the 7.3570 level during the Asian session on Monday. Analysis of the daily chart reveals that price movements within the established rising wedge pattern are becoming less pronounced, suggesting a possible slowdown in the bullish momentum. The 14-day Relative Strength Index (RSI) is hovering slightly above the 70 threshold, indicating an overbought condition, which may trigger a downward adjustment soon.
Resistance levels for the USD/CNH pair are observed at the psychological level of 7.3600. Should it breach this barrier, the next point of interest would be the upper boundary of the rising wedge, around 7.4000. A sustained move beyond this upper slope could reinforce bullish sentiment and propel the currency pair towards the significant resistance level of 7.5000.
Conversely, on the downside, initial support is anticipated at the nine-day Exponential Moving Average (EMA) positioned at 7.3346. If this level is breached, the next support could emerge from the lower slope of the rising wedge, which is near the 7.3070 area, followed by the psychological level of 7.3000. A break below the 7.3000 level might diminish the bullish outlook, potentially leading the pair to test further psychological support around 7.2000.
Overall, traders will be closely monitoring these key levels as the USD/CNH pair continues to navigate through its current market dynamics. The interplay between resistance and support will play a crucial role in determining whether the pair can sustain its bullish momentum or if a correction is indeed on the horizon.
