The spot rate broke the intermediate resistance of its medium term bullish channel at 99.80 leading to an acceleration. A pull back to these levels is expected before reaching the upper limit of its channel at 101.00. However, a break of these levels will release good potential and reach the lower limit of its channel at 98.50.
Technical indicators provide buy signals but evolve in overbuy zone supporting the assumption of a pull back. Bollinger bands are much discarded as a result of a strong increase of these days. Stabilization is expected in a short-term. Furthermore, the spot rate evolves at the levels of the superior band strengthening the resistance.
As the spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 99.80 with the 1st objective at 100.40 and then at 100.60. A breakthrough of 99.60 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means selling the spot rate as soon as it is broken through its support of 99.80 with the 1st objective at 99.20 and then at 99.00. A breakthrough of 100.00 will invalidate this scenario.
