The spot rate approaches the intermediate resistance of its medium-term bearish channel in 1.3340 leading to acceleration. A break of this level will allow it to reach the upper limit of its channel at 1.3400.
Technical indicators provide sell signals supporting the assumption of a decline in a short term. 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 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 1.3340 with the 1st objective at 1.3280 and then at 1.3260. A breakthrough of 1.3360 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 1.3340 with the 1st objective at 1.3400 and then at 1.3420. A breakthrough of 1.3320 will invalidate this scenario.
