The spot rate broke the intermediate resistance of its medium-term bearish channel at 101.40 leading to acceleration. A pull back on these levels is expected before the upper limit of its channel at 102.20 is reached.
Technical indicators provide sell signals supporting the assumption of a pull back in the short term. 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 intermediate support of its channel, we suggest 2 scenarios. The first one is the hypothesis of a pull back where we recommend a buy on the level of 101.40 with the 1st objective at 102.00 and then at 102.20. A breakthrough of 101.20 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 101.40 with the 1st objective at 100.80 and then at 100.60. A breakthrough of 101.60 will invalidate this scenario.
