On the daily chart below, we can see that the price has now come into the neckline of the major double top at 0.6514. The divergence between the two tops and the MACD gives this pattern a higher probability of working out.
To be confirmed, the price will need to break the neckline and start the downtrend to see the sellers target the 0.5860 level. The moving averages are clearly pointing south so the bearish bias remains for now.
On the 4 hour chart below, we can see that the price has come into the neckline diverging with the MACD. This is a signal of a loss of momentum and generally we see a pullback or reversal.
In this instance, it should signal a pullback given that the fundamentals turned in favour of the USD as the market is repricing a higher terminal rate caused by all the recent economic data surprising on the hot side.
We can see that for the pullback a strong barrier will be the confluence of the trendline, the previous swing level acting as resistance and the 38.2% Fibonacci retracement level. We will most likely see sellers piling in there.
On the 1 hour chart below, we can see more closely the setup for the pullback. The levels for traders are clear. Sellers can lean on the 0.6270 level with defined risk and can fold if the price breaks above the trendline and starts rallying.
A break of the neckline at 0.6191 will give the sellers the conviction for the major downtrend and confirm the double top. Buyers will need to break above the trendline to first target the 0.6390 resistance and on a further break the high of the double top at 0.6514.
