The spot rate is currently testing the upper limit of its medium term bearish channel at 1.3470 suggesting a decline. However a break of these levels will initiate a violent bullish channel.
Technical indicators provide sell signals but until the resistance is not broken, the assumption of a decline is most likely. Bollinger bands have stabilized showing a more regular volatility.
As the spot rate is currently testing the upper limit of its channel, we recommend 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 1.3470 with the 1st objective at 1.3410 and then at 1.3390. A break through 1.3490 will invalidate this scenario. The second scenario is a break of its resistance and we recommend a “buy stop” which means buying the spot rate as soon as it has broken through its resistance of 1.3470 with the 1st objective at 1.3530 and then at 1.3550. A break through 1.3450 will invalidate this scenario.
