The spot rate approaches the upper limit of its medium-term bullish channel at 1.5530 suggesting a decline. However, a break of this level will initiate a more violent bullish channel.
Technical indicators provide buy 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.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 1.5530 with the 1st objective at 1.5470 and then at 1.5450. A breakthrough of 1.5550 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 1.5530 with the 1st objective at 1.5590 and then at 1.5610. A breakthrough of 1.5510 will invalidate this scenario.
