The spot rate evolves in the short term bearish channel and in the medium term bullish channel. It is actually testing the upper limit of its short term bearish channel at 98.40 and seems to decline. However, a break of these levels will release good potential and will reach the upper limit of its medium term bullish channel at 99.00.
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. Furthermore, superior band strengthens the upper limit of the short term bearish channel supporting the assumption of a violent movement in case of break.
The spot rate tests its resistance that is why we recommend 2 scenarios: the first one is the hypothesis of a decline where we suggest a sell at the level of 98.40 with the 1st objective at 97.80 and then at 97.60. A breakthrough 98.60 will invalidate this scenario. The second scenario is the hypothesis of a break of its resistance where we advise a “buy stop”. We recommend to buy the spot rate as soon as it is broken through its resistance of 98.40 with the 1st objective at 99.00 and then at 99.20. A breakthrough 98.20 will invalidate this scenario.