The spot rate approaches the lower limit of its medium term bearish channel at 122.70 suggesting a rebound. However, a break of these levels will free a large potential and initiate a more violent bearish channel.
Technical indicators do not provide clear 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 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 at the level of 122.70 with the 1st objective at 123.30 and then at 123.50. A break through 122.50 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 122.70 with the 1st objective at 122.10 and then at 121.90. A break through 122.90 will invalidate this scenario.
