The spot rate is currently testing the intermediate support of its medium-term bullish channel at 106.90 suggesting a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 106.50.
Technical indicators provide sell signals, but until the support is not broken the assumption of a rebound 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 intermediate support of its channel, we suggest 2 scenarios. The first one is the hypothesis of a rebound where we recommend a buy on the level of 106.90 with the 1st objective at 107.50 and then at 107.70. A breakthrough of 107.30 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means to sell the spot rate as soon as it has broken through its support of 107.50 with the 1st objective at 106.90 and then at 106.70. A breakthrough of 107.70 will invalidate this scenario.
