The spot rate approaches the upper limit of its medium-term bearish channel at 1.6090 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators do not provide clear signals, but until the resistance is not broken the assumption of a decline is most likely. Bollinger bands have stabilized showing a more regular volatility.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenario. The first one is the hypothesis of a decline where we recommend a sell on the level of 1.6090 with the 1st objective at 1.6020 and then at 1.6000. A breakthrough of 1.6110 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 1.6090 with the 1st objective at 1.6150 and then at 1.6170. A breakthrough of 1.6070 will invalidate this scenario.
