The spot rate approaches the upper limit of its medium-term bearish channel at 103.70 suggesting a decline. However, a break of these levels will initiate a violent 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.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 103.70 with the 1st objective at 103.10 and then at 102.90. A breakthrough of 103.90 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 103.70 with the 1st objective at 104.30 and then at 104.50. A breakthrough of 103.50 will invalidate this scenario.