The spot rate has tested the upper limit of its medium bullish channel and declined. It is testing now the intermediate support of this one at 1.5680, suggesting a rebound. However, a break of these levels will enable the lower limit of its channel at 1.5620.
Technical indicators provide buy signals supporting the assumption of a rebound. Bollinger bands have stabilized showing a more regular volatility. In addition, the upper band strengthens the upper limit of its channel supporting the hypothesis of a violent movement in case of failure
The spot rate tests its support that is why we recommend 2 scenarios: the first one is the hypothesis of a rebound where we advise a buy on the level of 1.5680 with the 1st objective at 1.5740 and then at 1.5760. A breakthrough 1.5660 will invalidate this scenario. The second scenario is the hypothesis of a break of its support and here we recommend a “sell stop”. We suggest to sell the spot rate as soon as it has broken through its resistance of 1.5680 with the 1st objective at 1.5620 and then at 1.5600. A breakthrough 1.5700 will invalidate this scenario.
