The spot rate is currently testing the intermediate support of its medium term bearish channel at 128.40 suggesting a rebound. However, a break of these levels will free a large potential and reach the lower limit of its channel at 127.20.
Technical indicators provide sell 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, so we recommend 2 scenarios: the first one is the hypothesis of a rebound - then we recommend a buy on the level of 128.40 with the 1st objective at 129.00 and then at 129.20. A break through 128.20 will invalidate this scenario. The second scenario is a break of its support - then we recommend a “sell stop” that means to sell the spot rate as soon as it has broken through its support of 128.40 with the 1st objective at 127.80 and then at 127.60. A break through 128.60 will invalidate this scenario.