The spot rate approaches the intermediate support of its medium-term bearish channel at 121.10 suggesting a rebound. However, a break of this level will free a large potential and reach the lower limit of its channel at 119.70.
Technical indicators provide sell signals, but until the support is not broken the assumption of a rebound is most likely. Bollinger bands have stabilized showing a more regular volatility.
The spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios. The first one is the hypothesis of a rebound where we recommend a buy on the level of 121.10 with the 1st objective at 121.70 and then at 121.90. A breakthrough of 120.90 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 121.10 with the 1st objective at 120.50 and then at 120.30. A breakthrough of 121.30 will invalidate this scenario.
