On the daily chart below, we can see that the price has finally broken out of the falling channel. A further breakout of the resistance at 0.9287 will give conviction to the buyers to target the 0.96 handle.
As we can see the falling channel was diverging with the MACD. When the price breaks out, we can generally see a correction all the way back to the top of the channel. The moving averages also switched to the upside giving a bullish bias.
On the 4 hour chart below, we can see that the buyers are struggling to break convincingly the resistance at 0.9287. Last Friday we got a fakeout and this continuous knocking on the resistance is now forming an ascending triangle pattern.
The buyers should have enough conviction to break out to the upside given that the fundamentals are now again in favour of the USD. The market is repricing a higher terminal rate from the Fed caused by recent hot economic data.
On the 1 hour chart below, we can see that if there is to be a pullback, it shouldn’t go below the 0.9214 level where we have confluence with the upper band of the broken channel, the trendline, a previous swing point and the 61.8% Fibonacci retracement level.
Sellers will need to break below that strong zone to invalidate everything and then target the lower band of the channel.
For the buyers that zone will be the last line of defence. For the more near-term price action, a break above the resistance at 0.9287 should lead to a bullish run given that yesterday’s US PMIs surprised again to the upside.
