USD/CNH Price Analysis: Yuan charts a pennant pattern

• USD/CNH has created a pennant pattern on the daily chart. 
• A breakdown will likely accelerate the sell-off from June highs.

USD/CNH (Yuan's offshore exchange rate) has printed a contracting triangle (lower high + higher low) on the daily chart.

The congestion could be referred to as pennant, as it is preceded by a near-90 degree decline from 7.1961 to 7.0397. 

At press time, the lower end of the pennant is located at 7.05, and resistance is located at 7.0862. A close below 7.05 would confirm pennant breakdown, a bearish continuation pattern. That would signal a resumption of the decline from 7.1961 and open the doors for 6.9041 (March 9 low). 

Alternatively, a pennant breakout would imply a bearish-to-bullish trend change and shift the focus to 7.1557 (May 4 high). At press time, USD/CNH is trading at 7.0710. 

Daily chart

Trend: Neutral

Technical levels