On the daily chart below, we can safely say that we got a successful breakout of the falling channel. The whole channel was diverging with the MACD and it’s likely that we may see a big correction all the way up to the top of the channel at 0.96.
Before that though, the buyers had to fight with a break of the 0.9287 resistance and are now struggling at the 0.9400 handle. If they manage to firmly break the 0.94 level, then the 0.96 handle will the next target. The moving averages switched to the upside signalling a change in trend and will act as support for the buyers.
On the 4 hour chart below, we can see that the buyers will have two strong support areas for another push to the upside. The first comes at the orange trendline where the confluence with the 38.2% Fibonacci retracement level will give them a good spot to lean on with defined risk.
In case the sellers manage to break below the trendline, the next support will be at the 0.9287 level which acted as strong resistance prior to the breakout. The buyers there will have also support from the blue trendline and the daily red long period moving average.
On the 1 hour chart below, we can see a possible double top pattern right at the 0.94 handle. The neckline coincides with the 38.2% Fibonacci retracement level, so a break below would give the sellers conviction for a deeper correction to the 0.9287 level as it would be the measured target of the chart pattern.
Today we have the ISM Manufacturing PMI and this is generally a market moving report. Since the “good news is bad news” now due to the market repricing higher interest rates from the Fed, we should see a rally in case the data beats expectations and a bigger fall in case we see a miss.
