The spot rate is currently testing the upper limit of its medium-term bearish channel at 118.00 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators do not provide clear 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 channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 118.00 with the 1st objective at 117.40 and then at 117.20. A breakthrough of 118.20 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 118.00 with the 1st objective at 118.60 and then at 118.80. A breakthrough of 117.80 will invalidate this scenario.
