The spot rate tested yesterday the intermediate support of its medium term bullish channel at 99.70 supporting the hypothesis of a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 98.30.
Technical indicators provide sell signals but until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
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 on the level of 99.70 with the 1st objective at 100.30 and then at 100.50. A breakthrough of 99.50 will invalidate this scenario. The second scenario is a break of its support then we advise a “sell stop” which means selling the spot rate as soon as it is broken through its support of 99.70 with the 1st objective at 99.10 and then at 98.90. A breakthrough of 99.90 will invalidate this scenario.
