On the daily chart below, we can see that the price has again rallied back to the 1.07 handle. This is a key resistance zone and the test comes as the moving averages get closer and threaten to cross upwards if the buyers manage to push the price above the 1.07 resistance.
The price started to rally after the hot ISM Services PMI, which may indicate that it’s not supported by fundamentals and thus could be just a squeeze. The sellers will need to defend this zone as a break above would give more conviction to the buyers.
This week we have Fed Chair Powell testimony and the NFP report. The sellers should gain control in case the NFP comes out hot, but in case it doesn’t, the buyers may have the strength to break above the 1.07 level.
On the 4 hour chart below, we can see that the rally back towards the 1.07 zone may have created a double top within a bearish trend. A double top is a reversal pattern, but it can be a continuation one if it forms within a trend.
Of course, to be confirmed, the price would need to break the neckline at 1.0576, but it’s likely that fundamental catalysts or a break below the trendline would be enough for the sellers to pile in in expectations of the breakout and new lower lows. The big target for the sellers remains the 1.05 support and only a break below would open the door for the main 1.02 target.
On the 1 hour chart below, we can see that the buyers are still in control as the moving averages are clearly crossed to the upside and are supporting the uptrend. The violet trendline should be the first line of defence for the buyers as a break below would signal a shift to more bearish momentum and the moving averages would cross to the downside confirming the new trend.
In case the price breaks below the trendline, the sellers should start to eye the blue trendline and then the low at 1.0533. The blue trendline will be the last line of defence for the buyers.
