The spot rate broke yesterday the intermediate support of its medium-term bearish channel at 101.90 leading to an acceleration and approaches now the lower limit of this one at 101.10 suggesting a rebound. However, a break of these levels will initiate a more violent bullish channel.
Technical indicators do not provide clear signals but evolve in oversell zone supporting the assumption of a rebound in a short-term. Bollinger bands are much discarded as a result of a strong decline these days. Stabilization is expected in a short-term.
As the spot rate is currently testing the lower limit 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 101.10 with the 1st objective at 101.70 and then at 101.90. A breakthrough of 100.90 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 iss broken through its support of 101.10 with the 1st objective at 100.50 and then at 100.30. A breakthrough of 101.30 will invalidate this scenario.
