In a post from yesterday, I outlined the 1.3597 to 1.3606 as a swing level to get to and through. A downward sloping trendline was also near that area. In trading today, both the swing area and the trendline was broken has the pair moved up to a new high since November 4 to 1.3616. However, the break failed/ran out of steam, and the break buyers turned to failed sellers. The price has moved down for five consecutive hourly bars.
The move to the downside has taken the price back toward its rising 100 hour moving average (see blue line in the chart below). That moving average currently comes in at 1.35602. Just below that is the 100 day moving average at 1.3550, and below that is the 200 hour moving average at 1.35316 (and moving higher – see green line).
The rubber will start to hit the road as the price moves toward this cluster of moving averages. Will the dip buyers prevail? Or will the sellers push below and started a corrective move to the downside for the pair after testing and breaking above key resistance on the daily chart, and failing.
More downside through the cluster of support would target 1.3489 (low from last Thursday's trade). Ultimately, the 38.2% retracement of the move up from the December 20 low at 1.34484 would need to be broken to give more confidence for the sellers.
For now, however, there is some selling on the failed break. As a result, the gains for the day have been erased, but the support looms and work needs to be done by the sellers.