The spot rate approaches the upper limit of its medium-term bearish channel at 119.90 suggesting a decline. However, a break of this level 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, we recommend 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 119.90 with the 1st objective at 119.30 and then at 119.10. A breakthrough of 120.10 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 119.90 with the 1st objective at 120.50 and then at 120.70. A breakthrough of 119.70 will invalidate this scenario.
