On the daily chart below, we can see that the price has run down to the trendline and the support at the 1.0700 handle before bouncing.
The 1.1000 handle held as the NFP report surprised everyone with a huge beat to the expectations and the ISM Services PMI beat added more fuel to the sell off. A pullback now may be due ahead of the CPI report next week.
In case the price falls further and breaks below the trendline and the support at 1.07, we may see more downside and the price falling to the 1.05 handle. We can also see the divergence between the whole move up in price since the end of November 2022 and the MACD.
In case the price breaks below the trendline, we should see a bigger correction towards the 1.02 handle, which is the bottom of the entire divergent move up.
On the 4 hour chart below, we can see more clearly the price bouncing off of the support zone and the trendline at the 1.07 handle. The price may pullback to the 1.08 handle where we have the 38.2% Fibonacci retracement level with a swing level as resistance. That’s a nice confluence where sellers may start to pile up. There’s nothing today on the economic data side, so the technical should lead.
On the 1 hour chart below, we can see that the price has been diverging with the MACD since the 1.08 price level. This signals a loss of selling momentum and in fact the price bounced right at the support and the trendline.
Generally, the price pulls back to the top of the divergent move, so that would be in the 1.08 price area where, as mentioned above, we also have the Fibonacci and the swing resistance levels. If the price breaks above the 1.08 handle, then we may see a bigger pullback toward the 1.09 handle where we have the 61.8% Fibonacci level.
