USDCNH has been developing in a downtrend since the peak at an all-time high of 7.193 in early-September, with the price retreating below the 200-day exponential moving average (EMA) to touch a five-month low at 6.9156 on Thursday.
The sell-off is looking overstretched according to the RSI which seems to be rebounding near its 30 oversold mark and the fact that the 50% Fibonacci of the 6.6686-7.193 upleg is in the neighborhood, further increases the case for an upside correction in the price. Yet with a bearish cross between the 20- and the 200-day EMA being in progress, the odds for a trend reversal seem less likely.
Should the buyers take over, the 200-day EMA could provide the key for more upside ahead of the crucial 7.000 level. Running higher, the 23.6% Fibonacci of 7.0697 would potentially come next into view, where another violation would doubt the strength of the ongoing downward pattern.
If sellers dominate, immediate support could arise near the familiar 61.8% Fibonacci of 6.8692. Crossing that barrier, 6.8258 is the nearest obstacle to keep next in mind.
Summarizing, USDCNH seems to be searching for a rebound near a key restrictive area, though only a decisive rally above the 7.0697 number would convince traders that the downtrend in the medium-term picture is fragile.
