The spot rate broke the intermediate resistance of its medium-term bearish channel at 1.5840 leading to acceleration. A pull back on these levels is expected before the upper limit of its channel at 1.5900 is reached.
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.
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 1.5840 with the 1st objective at 1.5900 and then at 1.5920. A breakthrough of 1.5820 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 1.5840 with the 1st objective at 1.5780 and then at 1.5760. A breakthrough of 1.5860 will invalidate this scenario.