The spot rate broke the upper limit of its medium-term bullish channel at 105.50 leading to acceleration. A pullback on these levels is expected before a more violent bullish trend is initiated.
Technical indicators provide sell signals supporting the assumption of a pullback in the short term. Bollinger bands are much discarded as a result of a strong increase these days. Stabilization is expected in the short term. 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 upper limit of its channel, we suggest 2 scenarios. The first one is the hypothesis of a pullback where we recommend a buy on the level of 105.50 with the 1st objective at 106.10 and then at 106.30. A breakthrough of 105.30 will invalidate this scenario. The second scenario is a break of its support where we advise a “sell stop” which means to sell the spot rate as soon as it is broken through its support of 105.50 with the 1st objective at 104.90 and then at 104.70. A breakthrough of 105.10 will invalidate this scenario.