The spot rate is currently testing the lower limit of its medium term bearish channel at 1.3300 suggesting a rebound. However, a break of these levels will free a large potential and initiate a more 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 strong decline these days. Stabilization is expected in a short term.
As the spot rate is currently testing the lower limit of its channel, we recommend 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy on the level of 1.3300 with the 1st objective at 1.3360 and then at 1.3380. A break through 1.3280 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 1.3300 with the 1st objective at 1.3240 and then at 1.3220. A break through 1.3320 will invalidate this scenario.
