The spot rate is currently testing the intermediate resistance of its medium-term bearish channel at 1.2980 and seems to initiate a decline. However, a break of these levels will free a large potential and reach the upper limit of its channel at 1.3030.
Technical indicators provide buy signals. But until the resistance is not broken, the assumption of a decline is most likely. Bollinger bands have greatly tightened in recent days, showing a decline in volatility and the imminence of a violent movement. Furthermore, the spot rate evolves on the levels of the inferior band supporting the hypothesis of a rebound.
The spot rate is currently testing the intermediate 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 1.2980 with the 1st objective at 1.2920 and then at 1.2900. A breakthrough of 1.3000 will invalidate this scenario. The second scenario is a break of its resistance where we recommend a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 1.2980 with the 1st objective at 1.3040 and then at 1.3060. A breakthrough of 1.2960 will invalidate this scenario.
