The spot rate is currently testing the intermediate support of its medium-term bearish channel at 1.2790 suggesting a rebound. However, a break of this level will free a large potential and reach the lower limit of its channel at 1.2690.
Technical indicators provide sell signals and until the support is not broken the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios. The first one is the hypothesis of a rebound where we recommend a buy on the level of 1.2790 with the 1st objective at 1.2850 and then at 1.2870. A breakthrough of 1.2770 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 1.2790 with the 1st objective at 1.2730 and then at 1.2710. A breakthrough of 1.2810 will invalidate this scenario.