The spot rate approaches the upper limit of its medium-term bearish channel at 1.3180 suggesting a decline. However, a break of these levels will initiate a 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 greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the upper limit of its channel, so we suggest 2 scenarios: the first one is the hypothesis of a decline, then we recommend a sell on the level of 1.3180 with the 1st objective at 1.3120 and then at 1.3100. A break through 1.3200 will invalidate this scenario. The second scenario is a break of its resistance, then we recommend a buy stop, which means to buy the spot rate as soon as it has broken through its resistance of 1.3180 with the 1st objective at 1.3240 and then at 1.3260. A break through 1.3160 will invalidate this scenario.
