The spot rate is currently testing the upper limit of its medium term bearish channel at 1.2940 suggesting a decline. However, a break of these levels initiate a bullish channel.
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 superior band strengthens the upper limit of its channel supporting the hypothesis of a decline.
The spot rate is currently testing the upper limit of its channel then, suggest 2 scenarios: the first one is the hypothesis of a decline where we recommend a sell at the level of 1.2940 with the 1st objective at 1.2880 and then at 1.2860. A breakthrough of 1.2960 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 1.2940 with the 1st objective at 1.3000 and then at 1.3020. A breakthrough 1of .2920 will invalidate this scenario.
