The spot rate is currently testing the intermediate support of its medium term bearish channel at 124.80 suggesting a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 123.10.
Technical indicators do not provide clear signals but until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of violent movement.
As the spot rate is currently testing the intermediate support of its channel, we recommend 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 124.80 with the 1st objective at 125.40 and then at 125.60. A break through 124.60 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 124.80 with the 1st objective at 124.20 and then at 124.00. A break through 125.00 will invalidate this scenario.
