The spot rate is currently testing the intermediate resistance of its medium term bullish channel at 1.6250 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 1.6330.
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 inferior band strengthens the lower limit of the channel 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 1.6250 with the 1st objective at 1.6190 and then at 1.6170. A breakthrough of 1.6270 will invalidate this scenario. The second scenario is a break of its resistance then we advise a “buy stop” which means buying the spot rate as soon as it has broken through its resistance of 1.6250 with the 1st objective at 1.6310 and then at 1.6330. A breakthrough of 1.6230 will invalidate this scenario.
