The spot rate broke bounced off on the lower limit of its medium term bearish channel at 100.80 and approaches now the intermediate resistance of this one at 101.80 suggesting a decline. However, a break of these levels will free a large potential and reach the upper limit of its channel at 102.40.
Technical indicators provide buy signals but until the resistance is not broken, the assumption of a decline is most likely. 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 resistance of its channel, we suggest 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 101.80 with the 1st objective at 101.20 and then at 101.00. A breakthrough of 102.00 will invalidate this scenario. The second scenario is a break of its resistance where we recommend a “buy stop” which means buying the spot rate as soon as it is broken through its resistance of 101.80 with the 1st objective at 102.40 and then at 102.60. A breakthrough of 101.60 will invalidate this scenario.
