The spot rate approaches the lower limit of its medium-term bullish channel at 117.00 suggesting a rebound. However, a break of these levels will free a large potential and initiate a violent bearish channel.
Technical indicators provide buy signals and until the support is not broken the assumption of a rebound is most likely. Bollinger bands are much discarded as a result of a strong decline these days. Stabilization is expected in the short term.
The spot rate is currently testing the lower limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a rebound where we recommend a buy on the level of 117.00 with the 1st objective at 117.60 and then at 117.80. A breakthrough of 116.80 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 117.00 with the 1st objective at 116.40 and then at 116.20. A breakthrough of 117.20 will invalidate this scenario.
