The spot rate is currently testing the lower limit of its medium term bearish channel at 1.6000 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 approach oversell zone and until the support is not broken, the assumption of a rebound is most likely. Bollinger bands are much discarded as a result of a strong decline these days. Stabilization is expected in a short-term.
The spot rate is currently testing the lower limit of its channel, we suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1.6000 with the 1st objective at 1.6060 and then at 1.6080. A breakthrough of 1.5980 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.6000 with the 1st objective at 1.5940 and then at 1.5920. A breakthrough of 1.6020 will invalidate this scenario.
