The spot rate approaches the upper limit of its medium-term bearish channel at 1.2930 suggesting a decline. However, a break of these levels will free a large potential and initiate a violent bullish channel.
Technical indicators provide buy signals supporting an assumption of a break of its resistance in short-term. Bollinger bands have stabilized showing a more regular volatility. Furthermore, the superior band strengthens the upper limit of its channel supporting the hypothesis of a violent movement in case of failure.
The spot rate is currently testing the upper limit 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 1.2930 with the 1st objective at 1.2870 and then at 1.2850. A breakthrough of 1.2950 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means buying the spot rate as soon as it is broken through its resistance of 1.2930 with the 1st objective at 1.2990 and then at 1.3020. A breakthrough of 1.2910 will invalidate this scenario.
