USD/CNH Price Analysis: Rises to two-week highs despite impending “death cross”

• USD/CNH has jumped to two-week highs at 6.92.
• The daily chart shows an impending death cross – bearish, but a lagging indicator. 
• The bulls need a break above key resistance at 7.0142.

USD/CNH is trading near 6.92, the highest level since Jan. 9. 

The pair is gaining altitude despite impending death cross – a bearish crossover of the 50- and 200-day moving averages (MA). 

The 50-day MA, currently at 6.9821, is trending south and looks set to cross below the 200-day MA in the next day or two. The longer duration average is currently flatlined near 6.9758. 

The death cross is widely considered an indicator of a bear market. However, it is a lagging indicator as MAs are based on historical data. The bearish cross, therefore, is the result of a prolonged sell-off and often works as a contrary indicator.

Put simply, the impending death cross on USD/CNH should not be a cause for concern for the bulls. The pair could test the former support-turned-resistance of 7.0412 (Dec. 12 low). A close higher would expose the 200-day MA at 6.9758. 

On the other hand, a strong rejection at 7.0412 would shift risk in favor of a re-test of recent lows near 6.85.

Daily chart

Trend: Bullish above 7.0412

Technical levels