News & Analysis at your fingertips.

We use a range of cookies to give you the best possible browsing experience. By continuing to use this website, you agree to our use of cookies.
You can learn more about our cookie policy here, or by following the link at the bottom of any page on our site. See our updated Privacy Policy here.

0

Notifications

Notifications below are based on filters which can be adjusted via Economic and Webinar Calendar pages.

Live Webinar

Live Webinar Events

0

Economic Calendar

Economic Calendar Events

0
Free Trading Guides
Subscribe
Please try again
More View more
Real Time News
  • Cleveland Fed President Loretta Mester says: - sees US GDP in 2022 between 3.75 and 4% - Supports tapering in November and concluding over the first half of 2022 - After liftoff, accommodative policy needed for some time
  • Fed Chairman Jerome Powell doesn't comment on the growth forecast or monetary policy in his introductory remarks
  • Kansas City Fed President Esther George says: - The labor market friction is fading barring a resurgence of virus - A 'normal' economy is likely to remain elusive for some time - Asset buying effects complicate the judging rate change plan
  • The risk rally that charged the S&P 500 and brethren post-FOMC has stalled into Friday's open. DailyFX's @JohnKicklighter discusses what is driving markets post Fed👇 https://t.co/qNuVaDrZPe
  • 🇺🇸 New Home Sales MoM (AUG) Actual: 1.5% Previous: 6.4% https://www.dailyfx.com/economic-calendar#2021-09-24
  • China has announced that they will be cracking down on Cryptocurrency mining and while this has been a reoccurring theme, regardless of that fact Get your market update from @JMcQueenFX here:https://t.co/FluWtTTM93 https://t.co/GnBLLucMs3
  • Looks like they couldn't hold the 8.8000 line for $USDTRY. Record high exchange rate (favoring Dollar over Turkish Lira) despite a still-17.75 percentage point differential in their benchmark rates... https://t.co/7FrlF8El1O
  • 🇺🇸 New Home Sales MoM (AUG) Actual: 1.5% Previous: 1% https://www.dailyfx.com/economic-calendar#2021-09-24
  • RT @elerianm: Thank you @LizAnnSonders for this and, more generally, for all your informative and insightful tweets. Two things to add from…
  • Heads Up:🇺🇸 Fed Bowman Speech due at 14:00 GMT (15min) https://www.dailyfx.com/economic-calendar#2021-09-24
Is It Time For EUR/SEK To Release The Pedal On Its Downward Momentum?

Is It Time For EUR/SEK To Release The Pedal On Its Downward Momentum?

Quasar Elizundia, Currency Analyst

Searching For Concise Recommendations That Can Improve Your Trading Skills? Then Our Traits Of Successful Traders Guide Is An Excellent Material For You! Obtain Them HERE

Talking Points:

  • So far, August being a great month for SEK against EUR
  • Bounce from consolidating Triangle pattern
  • Will the weekly upward channel dictate the direction for EUR/SEK?

August has been a pretty good month for the Swedish Krona against the Euro as out of the 10 trading days, 7 have registered a drop for the cross and more than half of these negative days have registered a drop above the average negative drop since April of 2014.

Short-Term Technical Outlook:

As presented in the chart below, since the high of July, trading action has taken place within the confined channels of a downward Andrew’s Pitchfork. Pitchfork at which current prices are hovering right at the bottom line of this channel, signaling that there is a high potential for a retracement for EUR/SEK in the short-term future as trading action seems to be respecting the channel.

Supporting this perspective, we also have a negative divergence between our 13 Period RSI and price action, behavior that is commonly seen when price action is exhausting its momentum on the direction on which it has been trading.

EUR/SEK 1-Hour Chart

Is It Time For EUR/SEK To Release The Pedal On Its Downward Momentum?

(Created Using Marketscope 2.0)

Bigger Picture:

EUR/SEK Daily Chart

Is It Time For EUR/SEK To Release The Pedal On Its Downward Momentum?

(Created Using Marketscope 2.0)

Depicted in the chart above we can observe that since October of 2014, EUR/SEK has been trading in a consolidating triangle, time at which the pattern registered its lowest level. On the other side, on December of 2014, the highest level for this pattern was registered. After that, the cross has been bouncing between the confined levels of this pattern several times with the last one being at the beginning of this month.

After reaching its upper line at the beginning of this month, EUR/SEK bounced back inside the pattern an accelerated its downside momentum (as mentioned in the opening paragraph), a movement that, therefore, brings to the table the picture that the cross might be heading to the lower line of this consolidating triangle.

Currently, EUR/SEK is hovering above its 55 EMA. For further confirmation of this downward trend, a breakout of the aforementioned technical level would be needed. In addition, today’s low was registered at the 38.2% Fibonacci retracement from the April low and the October high of this year. Therefore, this confluence zone of technical levels could represent a key resistance zone for the cross in its downside momentum.

EUR/SEK Weekly Chart

Is It Time For EUR/SEK To Release The Pedal On Its Downward Momentum?

(Created Using Marketscope 2.0)

Going further back in time, we could observe that the above consolidation pattern is taking place within a longer term upside channel, a channel that started taking place 4 years ago in August of 2012.

Bottom Line:

Given that on a short-term EUR/SEK is running out of steam and in a longer period of time the cross is hovering above important technical levels, there is a high potential that the cross will take a break on its downward momentum. Therefore, we could see the cross trading around the 38.2% Fibonacci retracement level before trading lower towards the support line of this consolidating triangle pattern.

As a contrary perspective, instead of trading back to levels of its low line of the consolidating triangle, the cross respects the lower line of the weekly upward channel and bounces from in order to start looking for higher levels bringing to an end the consolidating triangle above.

If you are interested in knowing more where the EURO might be heading, CLICK HERE!

Are you a short-term trader? Then GSI is a must have tool for your trading! Check it out HERE

Written by Quasar Elizundia

DailyFX provides forex news and technical analysis on the trends that influence the global currency markets.

DISCLOSURES