As we predicted these last few days, the spot rate came to test the intermediate support of its medium term bearish channel at 1.5550 and bounced. It approaches now the upper limit of this one at 1.5630. A break through these levels will release important potential and it allows us to extend the increase of last week at output of the channel.
Technical indicators do not provide understandable 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.
Recently the spot rate has been evolving between the intermediate support of its medium term bearish channel at 1.5550 and the upper limit of this one at 1.5650. We recommend buying it at the levels of 1.5550 with a target at 1.5610. We also recommend a “buy stop” if the spot rate breaks through its resistance at 1.5650 with the 1st target at 1.5710.