As we predicted yesterday, the spot rate bounced off towards the intermediate support of its medium term bullish channel at 96.80 and reached the upper limit of it at 97.90. A decline has probably started, but a break through these levels would free up a significant potential and initiate a more violent bullish trend.
Technical indicators provide sell 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.
Graphical configuration resembles that with the EUR/USD currency pair, so we recommend two options of entering the market. The first one is to use “buy stop” and buy as soon as the spot rate is broken through its resistance of 97.90 with the 1st objective at 98.50. The second option is to try a “sell stop” and sell as soon as the spot rate is broken through its support of 96.80 with the 1st objective at 96.20.
