Euro Outlook: EUR/SEK, EUR/NOK on Edge of Bearish Correction?

Euro, EUR/SEK, EUR/NOK – TALKING POINTS

• EUR/SEK and EUR/NOK multi-year uptrends in danger of bearish correction
• EUR/NOK is on the cusp of breaking below the July 2019 rising support zone
• EUR/SEK upside momentum is ebbing; will it break below the 2017 uptrend?

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EUR/SEK Technical Analysis

On November 25, EUR/SEK briefly dipped below the September 2017 uptrend. While the pair closed just above the cusp of the support zone, the unprecedented move could invite more meaningful follow-through. Looking ahead, if the pair breaks below the rising support channel with a daily close, it could precede an aggressive selloff and open the door to testing another key price range.

EUR/SEK – Daily Chart

EUR/SEK chart created using TradingView

A weekly chart shows EUR/SEK has been on a broad uptrend since March 2013. The pair’s flirtation with the September 17 rising support channel could alarm traders with long positions. Breaching the lower two-year uptrend could open the door to testing the five-year support zone. While this in itself would not necessarily mark a tectonic shift in the pair’s trajectory, it could indicate that the slope of appreciation may be in for a correction.

EUR/SEK – Weekly Chart

EUR/SEK chart created using TradingView

EUR/NOK Technical Analysis

EUR/NOK is continuing to flirt with the 2019 uptrend, which, if taken too far could see the pair breach below it and face severe selling pressure if traders interpret the break as a bearish correction. Were this to occur, EUR/NOK may then seek to test support at 1.0602. Beyond that, the next major floor to watch will be the 9.9278-9.9009 range, though along the way down the pair will likely experience some downside friction.

EUR/NOK – Daily Chart

EUR/NOKchart created using TradingView

Zooming out to a weekly chart shows that EUR/NOK – like EUR/SEK – may also be on the verge of a bearish correction. While the slope may become less steep, it may not discourage traders with long positions. The latter may only become worried if EUR/NOK breaks below the July uptrend with follow-through and begins to re-test the December 2012 rising support channel. A breach below that may mark a tectonic shift in the pair’s trajectory.

EUR/NOK – Weekly Chart

EUR/NOKchart created using TradingView

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--- Written by Dimitri Zabelin, Jr Currency Analyst for DailyFX.com

To contact Dimitri, use the comments section below or @ZabelinDimitri on Twitter