The spot rate is currently testing the intermediate support of its medium-term bearish channel at 123.90 suggesting a rebound. However, a break of this level will free a large potential and reach the lower limit of its channel at 118.40.
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 123.90 with the 1st objective at 124.50 and then at 124.70. A breakthrough of 123.70 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 123.90 with the 1st objective at 123.30 and then at 123.10. A breakthrough of 124.10 will invalidate this scenario.