After breaking through the resistance of its bullish channel, the spot rate made a pull back and is testing now the upper limit of the channel at 98.60, suggesting a decline. However, a break of these levels will release a good potential and initiate a more violent bullish trend.
Technical indicators approach overbuy zone supporting the assumption of a decline. Bollinger bands are much discarded as a result of a strong increase of these days. Stabilization is expected in a short term. Furthermore superior band strengthens the intermediate resistance supporting the assumption of a violent movement in case of a break.
The spot rate tests its resistance that is why we recommend 2 scenarios: the first one is the hypothesis of a decline where we advise a sell on the level of 98.60 with the 1st objective at 98.00 and then at 97.80. A breakthrough 98.80 will invalidate this scenario. The second scenario is the hypothesis of a break of its resistance then we recommend a “buy stop”. We suggest to buy the spot rate as soon as it is broken through its resistance of 98.60 with the 1st objective at 99.20 and then at 99.40. A breakthrough 98.40 will invalidate this scenario.