The spot rate approaches the intermediate resistance of its medium-term bearish channel at 1.6080. It seems that a decline was initiated. However, a break of these levels will free a large potential and reach the upper limit of its channel at 1.6140.
Technical indicators provide buy 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.
The spot rate is currently testing the intermediate resistance of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 1.6080 with the 1st objective at 1.6020 and then at 1.6000. A breakthrough of 1.6100 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 1.6080 with the 1st objective at 1.6140 and then at 1.6160. A breakthrough of 1.6060 will invalidate this scenario.