The spot rate broke the intermediate resistance of its medium-term bearish channel at 100.60 leading to acceleration. A pull back on these levels is expected before reach the upper limit of its channel at 101.20.
Technical indicators provide buy signals supporting the assumption of a pull back in the short term. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. 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 intermediate support 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 100.60 with the 1st objective at 101.20 and then at 101.40. A breakthrough of 100.40 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 100.60 with the 1st objective at 100.00 and then at 99.80. A breakthrough of 100.80 will invalidate this scenario.