On the daily chart below, a possible double top might have formed. Although not that reliable without a clear higher high, the divergence between the price and the MACD may also confirm the double top.
The neckline is the support at 0.6191 and the price will need to break down to confirm the double top and signal a fall to 0.5900 as the measured target.
The US Dollar had a strong rally out of the “WOW” NFP number last Friday that coupled with the strong ISM Services PMI beat raised again fears of another inflationary wave and the Fed being forced to hike interest rates above their projected terminal rate.
On the 4 hour chart below, we can see the price currently pulling back with the next strong resistance being at 0.6414 where we can see also a confluence with the 50% Fibonacci retracement level.
That’s probably where we will start to see a strong selling pressure as the risk is defined for further short positions. Failure to hold that line and the buyers should regain control targeting the resistance at 0.6514.
On the 1 hour chart below, we can see that at the moment there’s strong buying momentum as depicted by the blue short-term moving average being much higher than the red long-term moving average.
The 38.2% Fibonacci retracement level should see some sellers coming in, but to gain some conviction for an extended move lower, we will need the blue moving average to fall below the red one. In this way, we will have more confirmation of selling pressure.
The market may want to wait for the US CPI report next week though before choosing a side, so the pullback may extend towards the resistance and the 50% Fibonacci level at 0.6413.
