USD/CNH technical analysis: Rally stalls near 78.6% Fib

• Short-term overbought conditions are likely capping upside in USD/CNH at key Fib hurdle of 6.9140. 
• A temporary pullback to 6.85 cannot be ruled out. 

USD/CNH is currently trading at 6.8927, representing a 0.20% drop on the day, having struggled to find acceptance above 6.9137 (78.6% Fibonacci retracement of the drop from 6.98 to 6.6699).

The failure to scale the key Fibonacci hurdle could be associated with the overbought conditions reported by the 14-day relative strength index (RSI).

The pullback could be extended further to the ascending (bullish) 5-week moving average (MA), currently at 6.8582. The outlook, however, will remain bullish as long as the pair is holding above the 10-day MA.

On the higher side, key resistance is seen at 6.9242 (Dec. 21 high). A violation there would expose 6.95.

Daily chart

Trend: Bullish