The spot rate approaches the lower limit of its medium-term bullish channel at 1.2900 suggesting a rebound. However, a break of these levels will free a large potential and initiate a violent bearish channel.
Technical indicators provide sell 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 evolves at the level of the spot rate supporting the hypothesis of a rebound.
The spot rate is currently testing the lower limit of its channel then, suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1.2900 with the 1st objective at 1.2960 and then at 1.2980. A breakthrough of 1.2880 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.2900 with the 1st objective at 1.2840 and then at 1.2820. A breakthrough of 1.2920 will invalidate this scenario.
