The spot rate broke yesterday the intermediate resistance of its medium term bearish channel at 102.90 and approach now the upper limit of this one at 103.80 suggesting a decline. However, a break of these levels will initiate a violent bullish channel.
Technical indicators provide sell signals and evolve in overbuy zone supporting the assumption of a decline in a short-term. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short-term.
As 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 at the level of 103.80 with the 1st objective at 103.20 and then at 103.00. A breakthrough of 104.00 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 103.80 with the 1st objective at 104.40 and then at 104.60. A breakthrough of 103.60 will invalidate this scenario.