The spot rate is currently testing the upper limit of its long-term bearish channel at 114.50 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators provide buy signals but approaches to the overbuy zone and the fact that the resistance has not been broken make the assumption of a decline most likely. Bollinger bands have stabilized showing a more regular volatility.
The spot rate is currently testing the upper limit of its channel, so we recommend 2 scenarios: the first one is the hypothesis of a decline, then we recommend a sell on the level of 114.50 with the 1st objective at 113.90 and then at 113.70. A break through 114.70 will invalidate this scenario. The second scenario is a break of its resistance, then we recommend a “buy stop”, which means to buy the spot rate as soon as it has broken through its resistance of 114.50 with the 1st objective at 115.10 and then at 115.30. A break through 114.30 will invalidate this scenario.
