On the daily chart below, we can see that the sellers couldn’t break the neckline of the double top at 1.1839 on their first try as the buyers defended the level strongly. The divergence between the double top and the MACD generally signals that the pattern has higher chances of working out.
So, we just need a clear breakout to confirm it. The moving averages are acting as resistance for now and the sellers keep leaning on them to position into the breakout. Today we have the NFP report, and we can expect a break lower if the data beats expectations or an extension to the upside if the data misses the forecast.
On the 4 hour chart below, we can see that the buyers have extended the price towards the previous support zone now turned resistance. It’s very likely that sellers here will defend the zone as they have also the trendline as a last line of defence. The selloff caused by Fed Chair Powell’s comments regarding the chance of a 50bps hike and a higher terminal rate has been almost entirely erased. This shows how the market is uncertain and focused more on the economic data.
On the 1 hour chart below, we can see that the price is now at the resistance zone where we can also find the 61.8% Fibonacci retracement level of the entire previous downward move. As you can see there’s also a divergence between the latest spike up and the MACD, which may signal a possible fakeout in the making.
The sellers should start to pile in here with the major downward trendline as the last line of defence. More conservative sellers may want to wait for a break lower of the minor upward trendline, which should confirm that the selling momentum is increasing, and the sellers are in control. The buyers will need a break above the major trendline to start a bigger move towards the 1.2143 level.
