The spot rate approaches the upper limit of its medium-term bearish channel at 1.3060 suggesting a decline. However, a break of these levels will initiate a 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 greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the upper limit of its trading range, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 1.3060 with the 1st objective at 1.3000 and then at 1.2980. A breakthrough of 1.3080 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 1.3060 with the 1st objective at 1.3120 and then at 1.3140. A breakthrough of 1.3040 will invalidate this scenario.
