The spot rate approaches the intermediate resistance of its long-term bearish channel at 112.50. It seems that a decline was initiated. However, a break of these levels will free a large potential and reach the upper limit of its channel at 119.80.
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 intermediate resistance 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 112.50 with the 1st objective at 111.90 and then at 111.70. A breakthrough of 112.70 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 112.50 with the 1st objective at 113.10 and then at 113.30. A breakthrough of 112.30 will invalidate this scenario.
