The spot rate is currently testing the upper limit of its medium-term bearish channel at 128.20 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators provide buy signals, but the rate evolves in overbuy zone supporting the assumption of a decline. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in the short term.
The spot rate approaches the upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a decline where we recommend a sell on the level of 128.20 with the 1st objective at 127.60 and then at 127.40. A breakthrough of 128.40 will invalidate this scenario. The second scenario is a break of its resistance where we advise a “buy stop” which means to buy the spot rate as soon as it is broken through its resistance of 128.20 with the 1st objective at 128.80 and then at 129.00. A breakthrough of 128.00 will invalidate this scenario.