The spot rate broke the upper limit of its medium-term bearish channel at 1.2760 leading to acceleration. A pull back on these levels is expected before a bullish trend is initiated.
Technical indicators provide sell signals supporting the assumption of a pull back in the short term. Bollinger bands have stabilized showing a more regular volatility. Furthermore, the spot rate evolves on the levels of the superior band supporting the hypothesis of a violent movement in case of failure.
The spot rate is currently testing the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a pull back where we recommend a buy on the level of 1.2760 with the 1st objective at 1.2820 and then at 1.2840. A breakthrough of 1.2740 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 1.2760 with the 1st objective at 1.2700 and then at 1.2680. A breakthrough of 1.2780 will invalidate this scenario.