Dollar-offshore yuan rate at transition point

The USDCNH pair has been in a clear uptrend for seven straight months ever since a reversal took place earlier this year. It has been climbing steadily until the 6.957 level in August where it faced a sharp rejection. But that did not hinder the bulls from pushing prices up further, until late October when it approached the 23-month high and started revealing signs of a possible reversal.

Looking at the Weekly Relative Strength Index (RSI), it seems to show a mean reversion to the low when the index rises above 80, thus exhibiting an occurrence known as "bullish divergence".

This combination is not a common occurrence as the previous time it took place was in December 2016, which led to a 16-month brutal sell down. RSI is a direction indicator that measures overbought and oversold conditions.