The spot rate broke the intermediate resistance of its medium-term bearish channel at 1.2710 leading to acceleration. A pull back on these levels is expected before the upper limit of its channel at 1.2820 is reached.
Technical indicators provide buy signals supporting the assumption of a pull back in the short term. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
The spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios. The first one is the hypothesis of a pull back then we recommend a buy on the level of 1.2710 with the 1st objective at 1.2770 and then at 1.2790. A breakthrough of 1.2690 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 1.2710 with the 1st objective at 1.2650 and then at 1.2630. A breakthrough of 1.2730 will invalidate this scenario.