The spot rate broke the intermediate resistance of its medium term bearish channel at 1.2940 leading to an acceleration. A pull back on these levels is expected before reach the upper limit of its channel at 1.3020.
Technical indicators provide sell signals supporting the assumption of a pull back in a short-term. Bollinger bands have greatly tightened in recent days showing a decline in volatility and the imminence of a violent movement. Furthermore, the spot rate evolves on the levels of the superior band supporting the hypothesis of a violent movement in case of failure.
The spot rate is currently testing the intermediate support of its channel, we recommend 2 scenarios: the first one is the hypothesis of a pull back where we recommend a buy at the level of 1.2940 with the 1st objective at 1.3000 and then at 1.3020. A breakthrough of 1.2920 will invalidate this scenario. The second scenario is a break of its support then we recommend a “sell stop” which means selling the spot rate as soon as it is broken through its support of 1.2940 with the 1st objective at 1.2880 and then at 1.2860. A breakthrough of 1.2960 will invalidate this scenario.
The material has been provided by Instaforex Company - instaforex.com
