As we expected yesterday, the spot rate made a pull back at the intermediate support of its medium term bullish channel at 1.5980 supporting a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 1.5900.

Technical indicators provide sell signals but approach an overbuy zone supporting the assumption of a return to its support in a short-term. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short-term.

As the spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios: the first one is the hypothesis of a rebound then we recommend a buy on the level of 1.5980 with the 1st objective at 1.6040 and then at 1.6060. A breakthrough of 1.5960 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.5980 with the 1st objective at 1.5920 and then at 1.5900. A breakthrough of 1.6000 will invalidate this scenario.