The spot rate have reached the upper limit of its medium term bullish channel at 1.2400 two times, but demonstrated a decline after the ECB meeting and broke the intermediate support of this one at 1.2230 leading to an acceleration. A pull back on these levels is expected before reaching the lower limit of its channel to 1.2070.
The technical indicators provide buy signals and approach oversell zone supporting the assumption of a pull back. Moreover, the break of its support was made with important volume limiting the risks of false signals. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
There are two choices: the first one is to try a short and sell the spot rate on the levels of 1.2230 with a target of 1.2170. The second one is waiting and trying to buy on the lower limit of its channel at 1.2070 with a target of 1.2130. This scenario would be invalidate if the spot rate break the resistance at 1.2230.