The spot rate bounced off to the lower limit of its medium term bullish channel and broke the intermediate resistance of this one at 1.2580 leading to an acceleration. A pull back on these levels is expected before reach the upper limit of its channel at 1.2660.
Technical indicators provide sell signals but until the support is not broken, the assumption of a pull back is most likely. Bollinger bands have stabilized showing a more regular volatility. Furthermore, the spot rate evolves at the levels of superior band supporting the hypothesis of a pull back in short-term.
As the spot rate tests the lower limit of its channel, we recommend 2 scenarios: the first one is the hypothesis of a pullbakc where we suggest a buy at the level of 1.2580 with the 1st objective at 1.2640 and then at 1.2660. A breakthrough of 1.2550 will invalidate this scenario. The second scenario is a break of its support where we advice a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 1.2580 with the 1st objective at 1.2520 and then at 1.2500. A breakthrough of 1.2600 will invalidate this scenario.
