USD/CNH technical analysis: Bull flag breakout confirmed

USD/CNH is looking north with the 4-hour chart reporting a bull flag breakout – a continuation pattern which usually accelerates the preceding bullish move.

As of writing, the currency pair is trading at 6.7442.

The bullish breakout would gain further credence if the spot violates the bearish lower highs pattern with a move above 6.7484. That would strengthen the case for a rally to levels above 6.80, as suggested by the flag breakout.

The bullish setup, however, would be invalidated if the pair re-enters the flag, although that looks unlikely, as the flag breakout is backed by the ascending 5- and 10-day moving averages (MAs) and an above-50 print on both the 14-day and 4-hour chart relative strength index.

4-hour chart

Trend: Bullish

Pivot points