The spot rate approaches the intermediate support of its medium-term bearish channel at 118.50 suggesting a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 117.10.
Technical indicators do not provide clear signals, but until the support is not broken the assumption of a rebound is most likely. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement.
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 on the level of 118.50 with the 1st objective at 119.10 and then at 119.30. A breakthrough of 118.30 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 118.50 with the 1st objective at 117.90 and then at 117.70. A breakthrough of 118.70 will invalidate this scenario.