The spot rate broke yesterday the upper limit of its long term bearish channel at 1.6130 leading to an acceleration. A pull back on these levels is expected before a resumption of its bullish movement.
Technical indicators provide buy but approach overbuy zone supporting the hypothesis of a pull back. Bollinger bands have stabilized showing a more regular volatility.The superior band evolves on the levels of the spot rate supporting the assumption of a pull back.
As the spot rate is currently testing the 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 1.6130 with the 1st objective at 1.6190 and then at 1.6220. A breakthrough of 1.6110 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.6130 with the 1st objective at 1.6070 and then at 1.6050. A breakthrough of 1.6150 will invalidate this scenario.
