The spot rate approaches the lower limit of its medium-term bearish channel at 1.6120 suggesting a rebound. However, a break of these levels will free a large potential and initiate a more violent bearish channel.
Technical indicators do not provide clear signals but, until the support is not broken, the assumption of a rebound is most likely. Bollinger bands have stabilized showing a more regular volatility. Furthermore, the inferior band strengthens the lower limit of its channel supporting the hypothesis of a rebound.
The spot rate is currently testing the lower limit of its channel where we suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy on the level of 1.6120 with the 1st objective at 1.6180 and then at 1.6200. A breakthrough of 1.6100 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 1.6120 with the 1st objective at 1.6060 and then at 1.6040. A breakthrough of 1.6140 will invalidate this scenario.
