The spot rate bounced off to the intermediate support of its medium term bullish channel at 1.5680 and is testing now the upper limit of this one at 1.5810 suggesting a decline. However, a break of these levels will release a good potential and initiate a more violent bullish channel.
Technical indicators provide sell signal and approaching overbuy zone supporting a decline and until the resistance is not broken the assumption of a decline is most likely. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in a short term. Furthermore the upper band strengthens the upper limit of its channel supporting the hypothesis of a violent movement in case of failure.
As the spot rate tests its resistance, we recommend 2 scenarios: the first one is the hypothesis of a decline where we suggest a sell on the level of 1.5810 with the 1st objective at 1.5750 and then at 1.5730. A breakthrough 1.5830 will invalidate this scenario. The second scenario is the hypothesis of a break of its resistance where we advise a “buy stop”. We recommend to buy the spot rate as soon as it is broken through its resistance of 1.5810 with the 1st objective at 1.5870 and then at 1.5890. A breakthrough 1.5790 will invalidate this scenario.
The material has been provided by Instaforex Company - instaforex.com
