The spot rate broke the intermediate resistance of its medium-term bearish channel at 1.3330 leading to acceleration. A pullback on these levels is expected before the upper limit of its channel at 1.3390 is reached.
Technical indicators provide sell signals supporting the assumption of a pullback in the 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 broke the intermediate resistance of its channel, we suggest 2 scenarios. The first one is the hypothesis of a pullback where we recommend a buy on the level of 1.3330 with the 1st objective at 1.3390 and then at 1.3410. A breakthrough of 1.3310 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 1.3330 with the 1st objective at 1.3270 and then at 1.3250. A breakthrough of 1.3350 will invalidate this scenario.
