The spot rate has tested yesterday the upper limit of its medium term bullish channel at 1.2870 and declined. It tests now the intermediate support of its channel at 1.2740 suggesting a rebound. However, a break of these levels will release a good potential and reach the lower limit of its channel at 1.2550.

Technical indicators do not provide clear signals but evolve in overbuy zone and until the support is not broken, the assumption of a rebound is most likely. Bollinger bands are much discarded as a result of a strong increase of these days. Stabilization is expected in a short-term.

As the spot rate is currently testing the intermediate support of its channel, we suggest 2 scenarios: the first one is the hypothesis of a rebound where we recommend a buy at the level of 1.2740 with the 1st objective at 1.2800 and then at 1.2820. A breakthrough of 1.2720 will invalidate this scenario. The second scenario is a break of its support where we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.2740 with the 1st objective at 1.2680 and then at 1.2660. A breakthrough of 1.2760 will invalidate this scenario.