On the daily chart below, we can see that the price has failed at the resistance at 1681 as Fed’s Bullard (hawkish, non-voter) signalled a possible 50 bps at the March meeting and a higher terminal rate needed than the one projected in December 2022.
We can also see that the price has been diverging with the RSI at the resistance, so the momentum was not there and since the fundamentals are now against further upside, it’s unlikely to see higher highs.
On the 4 hour chart below, we can see that the buyers will need to hold any of the Fibonacci retracement levels with the 61.8% having more strength as there’s also a previous resistance that now may have turned support. Given the fundamentals though, we should see sellers in control for now.
On the 1 hour chart below, we have a textbook divergence setup with a king’s crown pattern. What you will generally see is the price making a higher high that is divergent with the momentum indicator, in this case the RSI. Then you need to wait for the price to break the low giving the first signal of a change in trend.
Finally, you wait for the price to pullback to a Fibonacci retracement level, in this case we can see confluence of the low with the 38.2% level and the red long period moving average. This should be the entry for sellers.
The target is generally one of the Fibonacci extension levels, so either 127.2% or 161.8%. Here we can see that 161.8% has more value as there’s also previous resistance on the left.
