The spot rate is currently testing the upper limit of its medium-term bullish channel at 1.3600 suggesting a decline. However, a break of these levels will initiate a more violent bullish channel.
Technical indicators provide buy signals, but the rate evolves in overbuy zone supporting the assumption of a decline. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in the short term.
The spot rate approaches 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 1.3600 with the 1st objective at 1.3540 and then at 1.3520. A breakthrough of 1.3620 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 1.3600 with the 1st objective at 1.3660 and then at 1.3680. A breakthrough of 1.3580 will invalidate this scenario.