The spot rate approaches the lower limit of its medium term bearish channel at 1.2970 suggesting a rebound. However, a break of these levels will free a large potential and initiate a more violent bearish channel.
Technical indicators provide sell signals but 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.
The spot rate is currently testing the lower limit of its channel, so we recommend 2 scenarios: the first one is the hypothesis of a rebound - then we recommend a buy on the level of 1.2970 with the 1st objective at 1.3030 and then at 1.3050. A break through 1.2950 will invalidate this scenario. The second scenario is a break of its support - then we recommend a “sell stop” that means to sell the spot rate as soon as it has broken through its support of 1.2970 with the 1st objective at 1.2910 and then at 1.2890. A break through 1.2990 will invalidate this scenario.
