As we predicted yesterday, the spot rate broke the upper limit of its medium term bearish channel at 1.5580 leading to acceleration. A pull back on these levels is expected before resumption of a bullish trend. However, a break of these levels will invalidate this scenario and a violent bearish movement would be possible. Moreover, a short bullish channel has been formed and the lower limit of it strengthens the level of 1.5580.
Technical indicators provide sell signals supporting the assumption of a pullback but also can possibly result in decline. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
We recommend to buy the spot rate on the levels of 1.5580 with the 1st objective at 1.5640 and then at 1.5660. A breakthrough 1.5560 will alter this scenario.
