The spot rate approaches the upper limit of its medium-term bearish channel at 125.60 suggesting a decline. However, a break of this level will initiate a violent bullish channel.
Technical indicators provide sell signals and until the resistance is not broken the assumption of a decline 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 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 125.60 with the 1st objective at 125.00 and then at 124.80. A breakthrough of 125.80 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 125.60 with the 1st objective at 126.20 and then at 126.40. A breakthrough of 125.40 will invalidate this scenario.