The spot rate has bounced violently yesterday and is now testing the upper limit of its medium term bullish channel at 1.5760 and seems to initiate a decline. However, a break of these levels will release a good potential and initiate a more violent bullish trend.
Technical indicators provide buy signal but are approaching overbuy zone supporting a decline and until the resistance is not broken, the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short term.
The spot rate tests its resistance and we recommend 2 scenarios: the first one is the hypothesis of a decline where we suggest a sell on the level of 1.5760 with the 1st objective at 1.5700 and then at 1.5680. A breakthrough 1.5780 will invalidate this scenario. The second scenario is the hypothesis of a break of its resistance where we advise a “buy stop”. We recommend to buy the spot rate as soon as it is broken through its resistance of 1.5760 with the 1st objective at 1.5820 and then at 1.5840. A breakthrough 1.5740 will invalidate this scenario.