USD/CNH technical analysis: Looks south with head-and-shoulders breakdown on daily chart

• USD/CNH's daily chart shows a head-and-shoulders breakdown. 
• The bearish reversal pattern has created room for a drop to 6.95. 

USD/CNH, which represents China's offshore Yuan exchange rate, is currently trading at 7.0661, representing marginal losses on the day.

The CNH is looking to gain ground, as the People's Bank of China (PBOC) kept the one-year loan prime rate at 4.20%, disappointing expectations for a cut to 4.15%.

The daily chart is reporting a head-and-shoulders breakdown – a bearish reversal pattern. The 14-day relative strength index (RSI) is reporting bearish conditions with a below-50 print.

The pair, therefore, risks falling to support at 7.0309 (Sept. 13 low). Note that the head-and-shoulders breakdown has opened doors for 6.96 (target as per the measured move method).

The bearish case would be invalidated if the spot rises above a bearish lower high of 7.1125 created on Oct. 16.

Daily chart

Trend: Bearish

Technical levels