A new short term bearish channel has been formed this week. The spot rate broke the intermediate resistance of this one at 1.2370 leading to an acceleration. A pull back at these levels is expected before reaching the upper limit of the channel at 1.2440. An output of this channel would free a large potential and initiate a new trend.

Technical indicators provide buy signals supporting the assumption of a pull back. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. Moreover we can see lower volumes due to summer holidays raising fears of false signals.

For the moment the spot rate evolves in its channel then the potential of rise is limited. We recommend a buy at the levels of 1.2370 with the 1st objective at 1.2430. But when there will be an output of this channel the potential will greatly increase.