During this week the spot rate was evolving between the intermediate support of its medium term bearish channel at 95.50 and the upper limit of this one at 97.00. Yesterday it broke its support leading to acceleration. A pull back is expected before reach the lower limit of its channel to 93.80. Technical indicators provide sell signals but it is normal in regard of the violent movement observed yesterday. However, they are approaching oversell zone supporting the assumption of a pull back. We can note that the break of yesterday was made with important volumes limiting the risks of false signals. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. We support the assumption of a pull back and recommend to sell the spot rate on the levels of 95.50 with the 1st objective of 94.90 and then at 94.70. A breakthrough 95.70 will invalidate this scenario.
Albert Fitoussi is taking part in the "Analyst of the Year" award organized by MT5.com portal. If you like his article, please vote for him.