On the daily chart below, we can see that after breaching the key support level at 11492 the sellers couldn’t maintain control and the buyers came in with vengeance pushing the price back above the level. The price is now at the red long period moving average which will act as resistance.
The rally on Friday is seen as a squeeze as the ISM Services PMI beat expectations and should have been bearish for the market as good news is now seen as bad news due to the repricing of higher interest rates.
On the 4 hour chart below, we can see that the buyers will now fight with a strong level before getting more conviction for higher highs. The price has rallied into a resistance zone with the confluence of the 50% Fibonacci retracement level.
The strong rally on Friday has also overextended the price from the blue short period moving average. In such instances, the price generally consolidates or pulls back before the next move.
On the 1 hour chart below, we can see more closely the near term price action. We can see that while the price was breaching the support at 11492, it was diverging with the MACD. That is a sign of a loss of momentum and generally signals a pullback.
The moving averages on this timeframe have clearly crossed to the upside and conservative sellers may want to wait for them to cross back to the downside before considering new positions. Aggressive sellers may start to pile in here at this strong resistance zone. A break above should give the buyers control, so the sellers can fold quickly.
