On the daily chart below, we can see that the market broke the 134.50 resistance with conviction. The breakout of the falling channel should lead to a big correction to the 142 level, but before that, there are strong swing levels to break like the 134.50 level and the fundamentals need to be in favour of the USD.
The moving averages are clearly pointing to the upside and the red long period moving average will act as support for the buyers. On the risk side, the price may be a bit overextended and we may see a pullback to the 135.00 price area before another push towards the 138 handle.
On the 4 hour chart below, we can see that the price keeps diverging with the MACD. This generally leads to frequent pullbacks to the nearest swing levels or trendlines. Right now, it looks like the price is pulling back to the broken resistance at 134.50 that may now turn into support.
There we can find good confluence of the daily red long period moving average, the trendline and the 38.2% Fibonacci retracement level. It’s likely that we will find strong buying pressure in case the sellers push the price there. A break below the trendline would be a bad omen for the buyers and we may see the sellers taking the price to the 130 level.
On the 1 hour chart below, we can see that there’s a possible, although ugly, head and shoulders pattern. If the price breaks below the trendline and the Fibonacci levels, then the sellers should have even more conviction for a correction back to the 134.50 support.
The buyers will likely defend this first support at the orange trendline. Today there’s the ISM Manufacturing PMI, which is generally a market moving report, and we should see the price rallying in case the data beats expectations and falling in case we see a miss.
