USD/CNH Price Analysis: Downside remains elusive beyond 7.20 support confluence

• USD/CNH retreats from three-week-old resistance line, prints mild losses on a day.
• 21-EMA, weekly support line defends buyers amid firmer RSI.
• 50-EMA adds to the downside filters, bulls can aim for September’s high past 7.2300.

USD/CNH pares recent gains around 7.2220 as it again steps back from the short-term descending resistance line during Wednesday’s Asian session. Even so, a convergence of the 21-EMA and a three-day-old support line, around 7.2000 restricts the immediate downside of the offshore Chinese yuan (CNH) pair.

In addition to the immediate support confluence, an upbeat RSI (14) also keeps the buyers hopeful.

That said, the 50-EMA and 23.6% Fibonacci retracement level of September 12-28 upside, near 7.1800, acts as an extra filter to the south, a break of which could direct USD/CNH bears towards the three-week-old horizontal support area around 7.1500-1470.

It should be noted that the USD/CNH weakness past 7.1470 won’t hesitate to renew the monthly low of 7.0126.

Alternatively, an upside break of the downward-slopping resistance line from September 28, close to 7.2300 at the latest, could quickly propel the USD/CNH prices towards the previous month’s peak and the all-time high of 7.2675.

During the quote’s run-up past 7.2675, the 7.3000 round figure may gain the market’s attention.

Overall, USD/CNH is likely to witness a short-term pullback but the overall bullish trend remains intact.

USD/CNH: Four-hour chart

Trend: Bullish