USDCNH crashes -0.66% closing 470 pips lower
US Dollar/Chinese Yuan Renminbi (USDCNH) Technical Analysis Report for Mar 26, 2020 | by Techniquant Editorial Team
USDCNH ended Thursday at 7.0800 tanking 470 pips (-0.66%). This is the biggest single-day loss in over three months. The bears were in full control today, moving the market lower throughout the whole session. Closing within the previous day's range, prices missed to decisively move beyond the prior day's trading range.
Daily Candlestick Chart (USDCNH as at Mar 26, 2020):
Thursday's trading range has been 656 pips (0.92%), that's slightly above the last trading month's daily average range of 561 pips. Things look different on the weekly timeframe, where the market's trading range of the last week has been slightly below the market's average weekly trading range. The longer-term, monthly volatility is currently notably higher than usual for USDCNH. Prices continued to consolidate within a tight trading range between 7.0589 and 7.1430 where it has been caught now for the last three trading days.
During the whole day, prices traded within the previous day's range, unable to trade above the prior day's high or below the previous day's low forming an Inside Bar. Regardless of a strong opening the FX pair closed below the prior day's open and close, forming a bearish Engulfing Candle. Additionally, one bearish candlestick pattern matches today's price action, the Black Candle. The last time a Black Candle showed up on Tuesday, USDCNH actually gained 0.59% on the following trading day.
Prices are trading close to the key technical support level at 7.0589 (S1). After having been unable to move above 7.1430 in the previous session, the market ran into sellers again around the same price level today, missing to move higher than 7.1399.
The trend is clearly bullish, showing an intact uptrend in the short, medium and long-term.
Selling could speed up should prices move below the nearby swing low at 7.0589 where further sell stops might get triggered.
Among the eight market conditions that our pattern recognition engine identified today, the statistics for the OHLC Patterns based market condition "Bearish Engulfing Candle" stand out. Its common bearish interpretation has been confirmed for USD/CNH. Out of 90 times, USDCNH closed lower 56.67% of the time on the next trading day after the market condition occurred. The optimal exit for swing trading this condition on the short side has been after three trading days, showing a win rate of 53.33% with an average market move of 0.01%.
With four out of the seven Major FX Pairs closing higher today, the ones that stand out on the positive side are GBPUSD gaining 2.72% and NZDUSD closing 1.88% higher. On the flipside the worst performers have been USDCHF closing -1.43% lower and USDJPY losing -1.42%. Looking at the other Minor FX Pairs and Crosses, the winners of the day have been GBPHKD surging 2.72% and GBPZAR closing 2.65% higher. The worst performers of the day have been USDMXN tanking -4.12% and USDNOK closing -3.12% lower. Read more