The spot rate is currently testing the upper limit of its medium-term bullish channel at 109.60 suggesting a decline. However, a break of these levels will initiate a more 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 stabilized showing a more regular volatility.
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 109.60 with the 1st objective at 109.00 and then at 108.80. A breakthrough of 109.80 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 109.60 with the 1st objective at 110.20 and then at 110.40. A breakthrough of 109.40 will invalidate this scenario.
