On the daily chart below, we can see the price is slowly approaching the major broken downward trendline. That is something the buyers are watching and hoping for the level to hold, but the sentiment is increasingly turning bearish.
The moving averages are pointing south and yesterday we got some bad news in the ISM Manufacturing PMI report where the “prices paid” sub-index jumped back into expansion and triggered more worries about another inflationary wave and a more hawkish Fed. For now, the market is in a “sell the rallies” mode.
In the 4 hour chart below, we can see that the price is diverging with the MACD coming into the major trendline. That is a sign of weaker momentum and it may be caused by the buyers fighting hard the sellers as a breakout lower may trigger a bigger selloff.
The moving averages have acted nicely as resistance for the bearish trend and we can expect them to continue to do so as long as the economic data keeps coming in strong.
In the 1 hour chart below, we can see that if we were to get a pullback, the price is likely to come back to the trendline and the 61.8% Fibonacci retracement level. The sellers will start to pile in there as the risk will be defined.
Tomorrow we have the ISM Non-Manufacturing PMI report and that’s another key economic report that the market will be focused on. Strong readings, especially on the prices side, should lead to another selloff, while weak numbers should give the buyers some relief and lead to a more positive sentiment.
