The spot rate is currently testing the lower limit of its medium-term bullish channel at 102.90 suggesting a rebound. However, a break of these levels will free a large potential and initiate a violent bearish channel.
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 the recent days showing a decline in volatility and the imminence of a violent movement. Furthermore, the spot rate evolves on the levels of the inferior band supporting the hypothesis of a rebound.
The spot rate is currently testing the lower limit 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 102.90 with the 1st objective at 103.50 and then at 103.70. A breakthrough of 102.70 will invalidate this scenario. The second scenario is a break of its support then we recommend a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 102.90 with the 1st objective at 102.20 and then at 102.00. A breakthrough of 103.10 will invalidate this scenario.