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05.04.2013 10:11 AM
Strategy of the day on EUR/USD

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The spot rate is currently testing the upper limit of its medium-term bearish channel at 1.2960 suggesting a decline. However, a break of this level will initiate a violent bullish channel.
Technical indicators provide buy signals, but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 1.2960 with the 1st objective at 1.2900 and then at 1.2880. A breakthrough of 1.2980 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 1.2960 with the 1st objective at 1.3020 and then at 1.3040. A breakthrough of 1.2940 will invalidate this scenario.

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