The spot rate is currently testing the upper limit of its medium term bullish channel at 1.3170 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.
Technical indicators do not provide clear 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, then we recommend 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell on the level of 1.3170 with the 1st objective at 1.3110 and then at 1.3090. A break through 1.3190 will invalidate this scenario. The second scenario is a break of its resistance where we suggest a “buy stop” which means buying the spot rate as soon as it has broken through its resistance of 1.3170 with the 1st objective at 1.3230 and then at 1.3250. A break through 1.3150 will invalidate this scenario.
